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UPDATE 1-Zambia's CEC to discontinue power supply to Konkola Copper Mines

Sun 31st May, 2020 5:55pm
(Adds minister detail, KCM statement)
    LUSAKA, May 31 (Reuters) - Zambia's Copperbelt Energy Corp
(CEC)  CECZ.LZ  will stop supplying power to Vedanta's  VDAN.NS 
local unit Konkola Copper Mines (KCM) from Monday, it said after
talks on an extension to their supply agreement broke down over
debt owed to CEC.
    Zambia's Energy Minister Mathew Nhkuwa told Reuters that KCM
would now receive its power directly from state-owned utility
Zesco, which has previously sold electricity to CEC for onward
supply to KCM. 
    Nkhuwa said the bulk electricity supply agreement between
Zesco and CEC, which expired on March 31, would not be renewed.
    The power supply agreement between CEC and KCM also came to
an end on March 31 and was extended through mutual agreement
only as far as May 31, CEC said in a statement on Sunday. KCM
owes the energy company $132 million, CEC said.
    "Negotiations for its further extension have broken down,
despite CEC's best efforts in good faith towards securing a new
contract," the statement said. 
    A KCM statement statement said that, after the expiry of its
contract with CEC, the company had entered into another
agreement with Zesco, effective June 1. 
    "We expect a seamless transition in the supply of power from
CEC to Zesco and any interference or restriction will be an act
of sabotage," KCM said.
    In trying to agree the new contract, CEC sought to resolve
KCM's outstanding $132 million debt and also obtain a firm
commitment from KCM on timely payment of future electricity
charges, it said.
    CEC said it had informed KCM that its supply will be
discontinued, adding that this was the only option available
after the failed talks.
    "Due care has been taken to make certain that the process of
discontinuing supply ensures the safety of personnel and
equipment and preserves the integrity of the mine," CEC said.
    India's Vedanta owns about 80% of KCM.
    While Zesco will now transport power to KCM, it will still
travel through CEC power lines. Nkhuwa said that CEC would be
breaking the law if it refused to transport the power.
    "I issued a statutory instrument on Friday, declaring the
CEC lines a common carrier. CEC is therefore obliged to
transport the power from Zesco to KCM at a fee," Nkhuwa said. 

 (Reporting by Chris Mfula
Editing by Susan Fenton and David Goodman)
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