Zambia’s Declaration of CEC power infrastructure as common carrier | CEC Statement
The Copperbelt Energy Corporation Plc (CEC) has become aware of Statutory Instrument No. 57 of 2020 (SI 57) issued by the Minister of Energy, Honourable Mathew Nkhuwa, declaring all of CEC’s distribution and transmission lines as Common Carrier.
This declaration came just hours before the expiry of CEC’s power supply agreement (PSA) with Konkola Copper Mines Plc (KCM), which took effect at midnight on 31 May 2020 and in the wider context of the failed negotiations for the renewal of the Bulk Supply Agreement (BSA) between CEC and ZESCO, which lapsed on 31 March 2020. Both KCM and ZESCO are, as of now, effectively controlled by the Government of the Republic of Zambia (GRZ).
CEC notes the following significant events leading to the issuance by the GRZ of SI 57:
8 May 2020 – CEC institutes measures to recover debt from KCM, which has now grown to about USD144 million
13 May 2020 – KCM admits its indebtedness to CEC
26 May 2020 – ZESCO requests use of the CEC transmission network to supply power to its new unknown client on the Copperbelt and requests for a meeting in the first week of June 2020
28 May 2020 – CEC acknowledges the ZESCO request, stating that it stands ready to start negotiations as long as the customer involved has no valid agreement with CEC and does not owe CEC money
28 May 2020 – the Minister of Energy writes to CEC asking the Company to give path to ZESCO to supply power to KCM
29 May 2020 – GRZ through the Minister of Energy promulgates SI 57 declaring CEC infrastructure COMMON CARRIER
31 May 2020 – ERB writes CEC setting a wheeling tariff equivalent to about 30% of CEC’s current network tariff (current tariff charged for using the CEC network)
From the above events, it is abundantly clear that the GRZ has for all intents and purposes taken steps that amount to expropriation of the CEC infrastructure and CEC is now on the brink of defaulting on all its loans borrowed from international lenders. GRZ’s actions have the full effect of taking away CEC’s commercial and property rights, and completely inhibiting the Company from taking viable business decisions, including enforcing its legal and commercial rights in the best interest of the business.
CEC takes this opportunity to advise all its investors of these actions from the GRZ that are highly detrimental to the well-being of the business and its ability to continue as a going concern. Investors are notified that CEC will, in the time being, engage in dialogue with the GRZ in the hope of obtaining an amicable and equitable outcome targeted at restoring the Company’s commercial and property rights. CEC will keep all its investors fully updated.
Issued by Chama Nsabika
