Viewpoint: The KCM, CEC Electricity Tussle Is The Case Of Giving Ceasar What Belongs To Ceasar

| | ,

Konkola Copper Mines (KCM) seems accustomed to receiving goods and services gratis or paying whenever it suits them. Never mind the financial effect on those entities and individuals that they don’t pay on time. The latest in this habitual ‘we will pay when we want’ attitude is the humongous debt of $132 million in unpaid electricity bills to Copperbelt Energy Corporation Plc (CEC), the company that supplies KCM with electricity. At the prevailing exchange rate, this translates to about K2.5 billion!

That is a debt KCM does not deny. In court documents filed into the Kitwe High Court on 13 May 2020 to stop CEC from going ahead to reduce power supply to the mine last week, KCM admits they owe that much money and the provisional liquidator, Mr. Milingo Lungu, is reported, in a local daily, to have said that the CEC debt issue was complicated. It would have been good for Milingo to have explained exactly what is complicated about paying for a service you have received according to contract and seemingly in good order for a year.

Some very basic analysis of KCM’s own words shows that for the whole year that Milingo has been in charge of that business, whatever his mandate is, he has not paid for power because KCM states that it owed CEC $46.465 million before the liquidation process started and also that this is the exact same amount of money they paid CEC between October and December 2019. From our understanding, this was done in an arranged debt swap where the Zambia Revenue Authority (ZRA) which owes KCM refunds for valued added tax (VAT) paid KCM, which owes CEC, a portion of those refunds and CEC paid ZESCO the same amount of money that came from ZRA. Simply put, in all the time Milingo has been looking after the affairs of the country’s largest single power consumer, he has not paid for power.

The question is, what has he been paying for? There have been a lot of rosy stories from Milingo himself, other government officials and even some purported supplier representatives regarding the good performance of KCM in terms of liquidating debt and paying suppliers on time. Without question, those suppliers don’t include CEC!

Considering that power is the mine’s most important input, one would think that KCM would prioritize paying their supplier of power to avoid a situation they claim would cause irreparable damage to the mine. Why would you risk “irreparable damage” to an operation when you know fully well what would happen?

Is it because there’s a deliberate plot to somehow trap CEC and force it to act or not act in a certain way which would have them fall into some grand plan? If they press for payment and take measures to recover the debt, they give the government an excuse to take over the assets or something like that under the guise of undermining the national interest and being unsupportive of government. If they choose to bear the pain and loss, they are weakened and lose value. Either way, it’s clear to see who comes out the loser ultimately.

KCM under Milingo Lungu has no good or noble intentions towards CEC and by extension Zambia because he surely must understand the critical role the company plays in the energy industry, an industry that is already failing to adequately serve the needs of the population and needs all the private investment and participation it can attract. It would, therefore, seem quite obvious to the people in the political and economic leadership of this country that CEC should not be strangled because it’s existence in the electricity industry and the economy in general is much bigger than what short-sighted people would want us to believe for their own selfish gain.

Authored by Chilambwe Kalunga

Previous

Noah Chivuta: “I’m Not Stranded; We Are In Lockdown”

FRA Maintains Maize Floor Price At K110

Next