CEC describes govt takeover of its infrastructure as unfortunate

THE Copperbelt Energy Corporation says the action by the Zambian government has effectively taken away the 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.

Energy minister Matthew Nkhuwa on May 29, 2020 issued Statutory Instrument No.57 of 2020, the electricity (common carrier) (declaration) regulations, 2020 just before CEC was about to cut power supply to Konkola Copper Mines.

“The transmission and distribution lines set out in this schedule are declared as a common carrier for the purposes of the Act and shall be used on the terms and conditions determined by the Energy Regulation Board,” reads the SI. “Schedule: 1. Transmission lines. All transmission lines operated by the Copperbelt Energy Corporation. 2. Distribution lines. All distribution lines operated by the Copperbelt Energy Corporation.”

CEC managing director Owen Silavwe has described the situation as very unfortunate.

“But what can we do? Hmm there is not much that we can do, it is what it is. But look, as a business, we have to continue to dialogue with government. We can’t run away from speaking to government, so that aspect we’ll continue to dialogue with government hoping that one day, they will give us…CEC is a Zambian company, we are not going anywhere, we have to continue with dialogue,” Silavwe said in an interview.

Meanwhile, CEC has released a timeline of events leading up to the issuance of a Statutory Instrument No. 57 that led to declaring of CEC infrastructure common carrier, which reveals the government’s preconceived intentions to grab the privately owned power company.

In a statement released Tuesday evening, CEC revealed that prior to issuing a Statutory Instrument, days before the expiry of the power supply agreement with Konkola Copper Mines, Zesco Limited requested to use CEC lines to supply power to an unknown client on the Copperbelt, which the former agreed on condition that the said anonymous client had no contract with it or owed it debts for the power supplied to it before.

“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 per cent of CEC’s current network tariff (current tariff charged for using the CEC network,” read the statement issued by senior manager, corporate communications, Chama Nsabika.

She stated that as a result of the expropriation of CEC infrastructure by government, CEC was now on the brink of defaulting on all loans from international lenders.

“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,” stated Chama.

CEC is a licensed independent power generation, transmission, distribution and supply company whose core business is the supply of power to the copper mines based in the Copperbelt Province of Zambia and some mining companies in the Democractic Republic of Congo (DRC) in conjunction with that country’s state utility, SNEL. CEC wheels power through its network on behalf of ZESCO Ltd on the Copperbelt, owns and operates a transmission interconnection with the DRC, over 1,000 kilometres of high voltage transmission lines and 43 substations across the Copperbelt. CEC has five incorporated subsidiaries – CEC-Kabompo Hydro Power Limited (CEC-KHPL), CEC DRC Sarl, CEC-InnoVent South, InnoVent-CEC North and Power Dynamos Sports Limited (PDSL). CEC-KHPL is the special purpose vehicle through which CEC is developing the 40 megawatts Kabompo Gorge hydroelectric power project in Mwinilunga district of the North-Western Province of Zambia, while CEC DRC Sarl is a special purpose vehicle incorporated to secure the power trading segment and grow the company’s interest in the DRC market. PDSL is a special purpose vehicle which runs Power Dynamos Football Club. CEC is listed on the Lusaka Securities Exchange and is a member of the Southern African Power Pool.

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