Zambia’s Copperbelt Energy Corp.(CEC) said it will stop supplying power to Vedanta’s 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.