Editor's Comment

CEC must reciprocate

THE decision by Zesco Limited to continue supplying power to the Copperbelt Province through the Copperbelt Energy Corporation Plc (CEC) is magnanimous.
We expect the same magnanimity from CEC which has a monopoly of distribution, especially to the heart of Zambia’s economy – the mines.
Clearly, the CEC is leveraging on its status to cut a deal that would secure its position of guaranteed revenue, regardless of the impact this would have on Zesco, the company that generates the energy.
This doesn’t sound right, and it isn’t.  The interest of the country should come first, regardless of what one’s mandate is – service or profit.
The 20-year Bulk Power Supply Agreement (BSA) signed on November 21, 1997 to supply power to the mines as well as domestic customers in the mining townships and surrounding areas elapsed last night.
The BSA, which was initially scheduled to expire after 15 years in November 2012, was extended under the first amendment for some additional years from March 31, 2000 to give an effective 23 years life-span ending at midnight of March 31, 2020.
Government and Zesco have been aware that this agreement was expiring and sought earnestly to engage CEC for an interim agreement to facilitate continuity of power supplies to the Copperbelt under significantly new and better terms which would ensure sustainability of power supply to the region.
It is a pity that CEC is seemingly not willing to sign a short-term agreement with Zesco, opting to immediately secure a 16-year agreement, even if the commercial terms may be unfavourable for the power utility firm, Government or the public in the long term.
It was the desire of Government that all parties see the need to arrive at a workable short-term solution as the parties endeavour to work out a longer-term sustainable relation.
This is because the mining industry is the backbone of the economy.
Government recognises the strategic contribution of the mining sector to the country’s economy.
According to the World Bank, mining accounts for 12 percent of Zambia´s Gross Domestic Product and 70 percent of total export value.
The sector is also a significant source of government revenue and formal employment, both directly and indirectly.
Given its importance in the country’s socio-economic set-up, it is not going to make sense for mining activities to be disrupted because of misunderstanding between Zesco and CEC.
Any major disruption of power could result in serious damage to the facilities, including the flooding of some of them.  It could take forever to bring them back to life.
The ripple effects on the socio-economic activities of the country would be devastating.
Minister of Energy Matthew Nkhuwa said yesterday that from February this year, a team from the Industrial Development Corporation, Zesco and other government departments have been negotiating with CEC for a short-term agreement to facilitate continuity of power supply as a longer term mutually beneficial relationship was being worked out.
This is because if the mines did not receive power, as already stated, the impact would be devastating.
Production of minerals should continue seamlessly because it keeps the wheels of commerce and the economy running.
So, whether CEC is willing to sign an agreement or not, it must be in public interest to continue to supply power to the Copperbelt.
This is a defining moment for CEC to put the interest of the country above commercial interests because of the economic importance of the Copperbelt.
CEC should know that Zesco and Government are willing to sign the short-term agreement pending the outcome of the cost of study (CoS) to be conducted by the Energy Regulation Board, whose final report is expected sometime in November 2020.
The CoS is expected to have far-reaching consequences to the entire electricity supply industry with regard to matters of pricing and sustainability.
That is why Zesco cannot commit to a long-term supply agreement, for now, without due consideration of what it costs it to generate the much needed energy.
Zesco has to operate profitably for it to re-invest its revenue in expanding and improving its services.

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