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Zambia's CEC to discontinue power supply to Konkola Copper Mines after talks fail

Sun 31st May, 2020 4:02pm
LUSAKA, May 31 (Reuters) - Zambia's Copperbelt Energy
Corp.(CEC)  CECZ.LZ  said it will stop supplying power to
Vedanta's  VDAN.NS  local unit Konkola Copper Mines Plc (KCM)
from Monday after talks on extending their supply agreement
broke down over debt owed to CEC.
    Zambia's Energy Minister Mathew Nhkuwa told Reuters that KCM
would now get its power directly from state-owned utility Zesco
Ltd, which until now has sold electricity to CEC for onward
supply to KCM. 
    The power supply agreement between CEC and KCM came to an
end on March 31 and was only extended through mutual agreement
until May 31, CEC said in a statement on Sunday. KCM owes the
energy company $132 million in debt, 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. 
    KCM officials were not immediately available for comment. 
    In trying to agree the new contract, CEC sought to resolve
KCM's outstanding debt of $132 million as well as obtain a firm
commitment from KCM regarding the timely payment of electricity
charges going forward, it said.
    CEC said it had informed KCM that its supply will be
discontinued, adding that this was the only option available
after the talks failed to resolve KCM's outstanding debt and
obtain a firm commitment from KCM regarding the timely payment
of electricity charges going forward.
    "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 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)
 ((chris.mfula@thomsonreuters.com;))
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