ZESCO and KCM sue CEC for Power Restrictions | Zambia
ZESCO Limited and Konkola Copper Mines Plc (in liquidation) have sued the Copperbelt Energy Corporation (CEC) in the Lusaka High Court seeking a declaration that the latter’s action to restrict power supply to KCM contravenes the law.
Zesco and KCM are further seeking an order of injunction restraining the CEC by itself, its directors, officers or agents from interfering in the Time Sheet Agreement between the Plaintiffs through restricting KCM from receiving supply from Zesco, pending determination of the matter, among other claims.
In a statement of claim filed in the Lusaka High Court, Wednesday, Zesco stated that it entered into a Bulk Supply Agreement (BSA) with CEC on November 21, 1997, which expired and lapsed on March 31, this year.
It added that the BSA had not been renewed.
KCM, on the other hand, stated that it entered into a Power Supply Agreement (PSA) with CEC around March 2000 and expired on March 31, 2020.
“By letter of Intent dated April 17, 2020, KCM and CEC agreed to extend the PSA up to May 31, 2020. KCM will further aver that it owns mining operations at its Nkana, Konkola and Nchanga Integrated Business Units (IBUs), which requires stable and bulk electricity supply for the operations of the said mines and is interconnected to CEC network,” read the statement of claim.
“It was a term and condition of the said PSA that CEC would supply and KCM would pay for the power so supplied. CEC’s loss of its preferential status as bulk off-taker of Zesco’s electricity affected CEC’s capacity to ensure stable and bulk electricity supply to KCM.”
KCM stated that in an effort to ensure stable and reliable power for its operations, it executed a binding Term Sheet with Zesco on May 22, this year, effective June 1, 2020.
The plaintiffs explained that the execution of the Term Sheet relied on Zesco supplying power to KCM using CEC’s transmission and distribution lines.
Zesco and KCM stated that the Minister of Energy in performing the functions of his office did on May 29, this year, promulgate The Electricity Act (Common Carrier) (Declaration) Regulations, Statutory Instrument No. 57 of 2020 (S.I.), which in effect declared CEC’s transmission and distributions lines as Common Carriers.
The plaintiffs further stated that on June 1, this year, CEC communicated by notice issued to the public that it would restrict and switch off the supply of power to KCM at some of the delivery points.
They added that CEC effected that by restricting supply to KCM’s delivery points.
“KCM will aver that the above actions by CEC negatively disrupted its operations by reducing the firm capacity to critical and sensitive installations, such as the New Nchanga Concentrator Plant; Nchanga Underground Operations; the New Nchanga Smelter Furnace; the Konkola Concentrator Plant; Nkana Refinery and other critical installations like the Kafue Water Pump Station supplying water to the entire Nchanga Plant and the entire community within the vicinity of KCM,” read the statement of claim.
“Zesco will aver that CEC was made aware of the binding Term Sheet between it and KCM.”
KCM lamented that the disruption of supply of power to its facilities by CEC would result in irreparable injury, including but not limited to, the flooding of its mines.
The plaintiffs are now seeking an order or declaration that the action by CEC to unilaterally restrict power supply to KCM contravenes the law as promulgated under the Electricity Act (Common Carrier) (Declaration) Regulations Statutory Instrument No. 57 of 2020.
Zesco and KCM are further seeking an order restraining CEC from effecting or taking steps to take out any supply units, lines or delivery points to KCM as they are Common Carriers as declared under S.l. No. 57 of 2020.a
