Message Mar 23 Sep 2014 08:42

CEC stands ground on restricted power to KCM

THE Copperbelt Energy Corporation (CEC) has defended its decision to restrict power supply to Konkola Copper Mines (KCM) because the Vedanta Resources Plc-owned mining company allegedly refused to pay for electricity worth US$44 million from April this year to date.
CEC senior manager for corporate communication Chama Nsabika-Kalima said in a statement in Lusaka yesterday that the company started restricting electricity supply to KCM in accordance with the provisions set out in the Power Supply Agreement (PSA) for non-payment of outstanding invoices.
On Saturday, CEC began the restriction of power to KCM, a decision which the mining giant said would adversely affect its operations.
Minister of Mines, Energy and Water Development Christopher Yaluma has directed KCM and CEC to find an amicable way of resolving the impasse.
Ms Kalima said the PSA provides for restriction of electricity supply, which entails a reduction of electricity to an agreed minimum limit, ensuring continued availability of power for essential operations such as pumping of water to prevent flooding of the mine, ventilation and operation of medical facilities.
She said the PSA obliges the parties that even where there is a dispute, each party must continue to carry out its obligations, which entails that CEC must continue to supply electricity as KCM also continues paying for the service.
Ms Kalima said even if KCM disputed the invoice issued, it is obliged by the PSA to settle portions of the invoice it does not dispute.
“Despite KCM having declared a dispute and taken the matter to court in April 2014, CEC has continued to supply electricity to KCM. However, KCM has reneged on its contractual obligations and refused to pay CEC for invoices issued from March 2014 to date,” Ms Kalima said
She denied that CEC has effected a unilateral increase in power tariffs because it is contrary to the provisions of the PSA.
Ms Kalima said the increase in electricity tariffs was implemented industry-wide pursuant to a directive by the Energy Regulation Board (ERB).
“There is a dispute on the tariff increase directive issued by the ERB in April 2014. This tariff increment is the subject of litigation by the Chamber of Mines before the High Court. CEC, therefore, denies that it has effected a unilateral increase in power tariffs contrary to the provisions of the PSA,” Ms Kalima said.
She said KCM’s owing is exclusive of amounts due to the increment.
“Arising from unpaid invoices, CEC issued a restriction notice in accordance with the provisions set out in the PSA,” Ms Kalima said.
She, however, said KCM did not meet its contractual obligations but instead obtained an interim order of injunction in the High Court, restraining CEC from restricting, suspending or interrupting power supply.
She explained that during the period of the court order, CEC continued to meet its obligations in full.
“However, KCM on its part has consistently refused to pay for the electricity it has consumed, save for a payment of US$16.4 million in partial compliance with a mandatory order of injunction issued by the Commercial Court in favour of CEC on September 3, 2014.
“It is regrettable that CEC has been compelled to take such an action. However, it has become necessary to protect the CEC business and the interests of its shareholders and other stakeholders. It is hoped that KCM will perform its obligations to enable the parties revert to a normal business relationship,” she said.