“banner728.gif"

GOVT OWES KCM $180M IN VAT REFUNDS – VEDANTA

 

VEDANTA Resources says it is not being represented by Makebi Zulu in the matter of KCM’s liquidation in the Lusaka High Court. Vedanta also says while it intends to fully defend its legal rights, it called for the Zambian government to meet with it to come to a “mutually agreeable solution” to the current situation.

In a statement, Vedanta denied a recent article in the “Zambia Watchdog” which implied that Vedanta had appointed Zulu, who is Malambo PF member of parliament and Eastern Province minister, to represent them.

“This is incorrect. Mr Zulu has been appointed by the provisional liquidator who has taken full charge of KCM to represent their interests,” reads the statement.

“Vedanta’s legal representatives in this matter are Corpus Legal Practitioners and Mulenga Mundashi Kasonde Legal Practitioners. Vedanta is also being advised by Norton Rose Fulbright.”

 

According to Vedanta, its legal team was appointed for “their experience and political independence”.

 

“Vedanta’s legal representatives in Zambia yesterday [Wednesday] served papers notifying ZCCM- IH, KCM and the KCM provisional liquidator of its intention to apply to be joined as a party to the hearing by Justice Anessie M. Banda-Bobo in the Lusaka High Court on Friday 24 May 2019,” reads the statement.

“The application to be enjoined is a critical step in the process so that Vedanta may file and receive documents relating to the proceedings. Vedanta has serious concerns about the intentions of the applicants and the procedures that were followed by ZCCM-IH as a representative of government to obtain a provisional liquidation order on an ex parte basis against KCM in an apparent misuse of the legal process to date.”

It stated that the company was relying on the protection of its rights under Zambian law and international norms.

“Concerns include the following:

  • The ZCCM-IH petition for winding-up of KCM under the corporate insolvency Act deals with a broad range of issues relating to KCM not all related to the solvency of the business.
  • ZCCM-IH is not a major creditor of KCM.
  • ZCCM-IH and the Zambian government are represented on the KCM board, were fully apprised of, and party to the circumstances of the company and major decisions that were taken to manage KCM.
  • The provisional liquidation order was granted ex-parte, that is, without Vedanta, the majority shareholder, being present and able to present its case.
  • Vedanta’s application for an ex parte order to be enjoined in the liquidation hearing was rejected by judge Banda-Bobo on the basis that this could only be considered inter partes (that is, with the other parties being ZCCM-IH and KCM, represented by the provisional liquidator, being present).
  • The powers granted to the provisional liquidator by the Lusaka High Court most closely resemble those that would be granted to a liquidator on the final winding up of a business,” reads the statement.

 

It added that in light of recent events, where a number of expatriate employees and contractors had been prevented from leaving the country, Vedanta was calling on the Zambian government to ensure the unhindered passage of all employees or contractors to KCM inside, and into and out of the country.

It reiterated that Vedanta had been a “long-standing loyal investor” in KCM and in Zambia having invested over US$3 billion since the acquisition of the asset in 2004.

“This has extended the gross resource base by 214 million tonnes, included the commissioning of the Konkola Deep Mining Project as well as several studies into projects that could further extend the mine life and increase production,” reads the statement.

It stated that KCM employs nearly 13,000 people at its sites and operates clinics, hospitals and schools through its corporate social responsibility programme that amounts to over US$210 million since the acquisition, and has contributed US$1.3 billion to the Zambian Exchequer in that period and continues to be the leading Pay As You Earn contributor in the country.

“For the year ended 31 March 2019, Vedanta provided KCM with financial support (including funding of loan repayments) of approximately US$500 million.

“These significant financial and social investments combined with exponential rises in taxes, duties, fuel and power costs have placed an enormous and unaffordable burden on the company. The most recent restrictions and duty on concentrates have negatively impacted the running of the smelter and the much-needed acid to run its operations,” reads the statement.

“In addition, the Zambian government owes the company more than US$180 million in VAT refunds which has made the situation even more challenging.”

Leave a Reply

Your email address will not be published. Required fields are marked *