A GROUP of energy experts has questioned Zesco’s motive behind the refusal to renew a Bulk Supply Agreement it entered into with the Copperbelt Energy Corporation (CEC) over 22 years ago.

On November 21, 1997, Zesco Limited and CEC entered into an agreement where the former was supplying power to the latter at wholesale, a deal that comes to an end on March 31 this year.

Since then, CEC has been supplying power to mining companies on the Copperbelt, as well as most mining residential areas.

The company is also the major financier of the Zambian premier league side Power Dynamos Football Club.

Last Friday, CEC informed its shareholders that energy minister Mathew Nkhuwa had notified management that the agreement would not be extended once it expires at the end of March.

Responding to the government’s decision, the Energy Advisory and Solicitation Institute (EASI) argued that CEC was already proven to be a responsible stakeholder in the energy sector.

EASI chairperson Chisakula Kaputu said the motive behind the government’s refusal to renew the agreement with CEC was highly questionable.

“Zesco has since the post 2000 commercialisation narrative still remained in the doldrums of a social enterprise with very little to show of a financially sustainable business model existing,” he said in a statement yesterday.
“…EASI believes that we have an energy sector at crossroads with pertinent issues of cost reflective tariffs, Electricity Supply Industry (ESI) sustainability and viability, reform uncertainty, legacy PPAs and BSAs, energy security, etc at the fore, as such transparency and good intent is demanded of all the energy sector players/stakeholders.”

Kaputu demanded clarification from the PF government on what he termed as an ambiguous statement.
He stated that both Zesco and CEC were key stakeholders in the energy sector, hence the need for the government to reflect on the decision.

“The energy sector needs CEC as an already proven key stakeholder and only second to Zesco in functional responsibility in the power generation, transmission, distribution and supply portfolios. The energy sector needs Zesco the most as sole owner of 66 per cent of national installed capacity and over 30,000 km of transmission and distribution national grid as well as custodian of [the] National Control Centre/systems operator functionality,” stated Kaputu. “Government’s decision on the nearing expiring ZESCO – CEC BSA must be taken in the best interest of the country and energy sector above all else. Ambiguity around the bold statement that the ZESCO-CEC BSA ‘will not be renewed’ after it expires on 31st March 2020 needs to be clarified at the earliest opportunity. In order to calm the anxiety of the mining load owners and Copperbelt Province energy users in general, the discussion/negotiation around the ZESCO-CEC BSA issue needs to be expedited with resolution made way ahead of the expiry date of 31st March 2020.”

According to a notice to shareholders, the government, through Nkhuwa and Zesco, had notified CEC that the Bulk Supply Agreement would not be renewed once it expired.

“In accordance with Section 81(1) of the Securities Act No. 41 of 2016, the Board of Directors of Copperbelt Energy Corporation Plc (“CEC” or “the Company”) advises the Company’s shareholders, and the market, that the power purchase agreement or Bulk Supply Agreement (“BSA”) between CEC and ZESCO Limited (“ZESCO”), entered into on 21 November 1997 is expected to come to an end on 31 March 2020,” company secretary Julia Chaila stated. “The Government of the Republic of Zambia (“GRZ”), through the Minister of Energy, and Zesco have notified CEC of their position that the BSA will expire on the date stated above and will not be renewed. GRZ and Zesco have expressed to CEC their commitment to continue facilitating an efficient and economic supply of power to consumers on the Copperbelt both during the validity of and post the BSA. CEC wishes to emphasise its unwavering commitment to use its infrastructure and capabilities in ensuring continued and seamless supply of power to all consumers on the Copperbelt now and after the BSA.”

Source: The Mast

NKOMBO KACHEMBA, Kitwe
MINISTER of Energy Mathew Nkhuwa has assured the mining industry of continued power supply if Zesco and the Copperbelt Energy Corporation (CEC) fail to resolve the impasse over the bulk supply agreement.
Zesco has an agreement under which it supplies power to CEC which it sells to mines on the Copperbelt.https://epaper.daily-mail.co.zm/

Source: Zambia Daily Mail

Copperbelt Energy Corporation (CEC) Plc says it geared to tap into the Southern African Power Pool (SAPP) as an alternative source of electricity, should its Bulk Supply Agreement (BSA) with Zesco Limited not be renewed.

And CEC says it cannot restrict electricity to Konkola Copper Mines (KCM) Plc as it has done in the past to defaulting clients for unpaid invoices because the mining company has started making some payments.

The BSA between Zesco and CEC is a 20-year agreement that underpins power supply to the Copperbelt and it is set to come to an end in March, 2020.

Ministry of Energy Permanent Secretary Trevor Kaunda disclosed that the BSA will not be renewed.

“Government made a decision earlier in the year, if you have been following the news, that when the Bulk Supply Agreement that is existing now comes to an end in March, next year, it shall not be renewed. I think that is the Cabinet decision that was made earlier in the year. It’s not a rumour, that’s just what it is. So, those are now the discussions that are taking place between the parties. Post-March, 2020, how does supply in the Copperbelt and, indeed, other areas look like? That’s the discussion which is in place, and at an appropriate time, the nation shall be updated once those discussions are concluded because, basically, we still have the rest of December up to March for those discussions in terms of the outlook,” Kaunda said in an interview in Lusaka.

But responding to a press query for an update on CEC’s progress on its BSA with Zesco, CEC senior manager corporate communication & investor relations Chama Nsabika stated that the Kitwe-based power utility was geared to tap into the regional market through the SAPP, the cooperation of the national electricity companies in southern Africa, as an alternative source of power should the stalemate with Zesco over its BSA persist.

“The alternative source of power would be the regional market. CEC has bilateral Power Purchase Agreements (PPAs) with regional utilities and can, if necessary, access some of this power to benefit the local market. Deploying this solution, obviously only makes sense in circumstances where the local market is unable to meet CEC’s requirements. It is cardinal that everybody recognises that the situation we are faced with requires concerted efforts at constructive engagement and putting in place a mutually acceptable solution in good time. CEC will continue to render quality service to all its customers, using its infrastructure and capabilities, to the benefit of both its mining and non-mining customers. While the solution to the BSA remains to be agreed, CEC believes that in time, a mutually-acceptable solution that safeguards the interests of customers and investors will be found,” Nsabika stated.

On the company’s ongoing dispute with Zesco over non-payment of retainers from power CEC sold to mining companies, Nsabika noted that the status quo remained.

“On 4th December, 2019, in accordance with the Lusaka Securities Exchange listings rules, CEC issued a further cautionary announcement advising the market that the matter is in progress and remains under adjudication. The status quo remains,” she added.

And Nsabika added that the company would not restrict power supply to KCM despite its outstanding debt for electricity supplied to the mine’s business units as it had started making payments.

KCM remained in receipt of power throughout this year despite its indebtedness to CEC.

“It is true that KCM remains CEC’s largest customer and any non-payment for power supplied has a negative impact, not only on CEC’s financial performance, but also on the financial well-being of the entire value chain; a fact we also reflected in our published half-year results for the period January to June, 2019. It is also true that any payment default would constrain CEC’s ability to meet its payments to Zesco. CEC has continued to work constructively with all stakeholders, including the government, KCM and Zesco in respect of the KCM situation and it is evident that all parties are committed to seeing a KCM that meets its payment obligations. KCM has since made some payment against the outstanding amounts. We, therefore, take the view that the option to restrict power is not necessary at this stage,” stated Nsabika.

Source: News Diggers