Konkola Copper Mines says it views the recent attempt by the Copperbelt Energy Corporation to restrict power supply to the company as an act of lawlessness and in contempt of a Court Order obtained from the Kitwe High Court.
KCM General Manager Corporate Affairs Shapi Shachinda says whilst the agreement between CEC and KCM has expired, the power that KCM is receiving does not belong to CEC for CEC to interfere with.
Mr Shachinda said the debt owed by KCM to the CEC, is a direct consequence of the insufficient investment by Vedanta into the company which created a situation where the costs have remained at a higher level compared with the company’s revenue.
He says the attempts to restrict power at KCM by CEC are not new as they in 2014 restricted power to KCM for two weeks.
Mr Shachinda said a company is only placed in Provisional liquidation if it is unable to pay debts as and when they fall due.
He said the placing of KCM in provisional liquidation is a step in resolving the problems at KCM.
Mr Shachinda said ultimately, the solution lies in selling the company to an investor with sufficient capital to operate the company.
In the last 20 years, Konkola Copper Mines had a Power Supply Agreement with the CEC, which was underpinned on the Bulk Supply Agreement between Zesco Limited, and the CEC.
“Our agreement with the CEC expired on 31 March 2020, but was extended by mutual agreement between the two companies to 31 May 2020. KCM extended the agreement to the end of May to allow CEC to agree on a new Bulk Supply Agreement with Zesco or any other Power Producer. To date CEC has failed to agree with any producer for a Bulk Supply Agreement”, said Mr Shachinda.
He said this state of affairs left KCM with no other choice but to enter into an agreement directly with Zesco, leading to the signing of a Term Sheet Agreement by the two parties.
Mr Shachinda has explained that decision by KCM to enter into an agreement with Zesco makes for commercial efficacy on account that the power sourced from Zesco shall be cheaper than CEC