Zesco Cec Bulk Supply Agreement

“Pursuant to section 81(1) of the Securities Act No. 41 of 2016, the Board of Directors of Copperbelt Energy Corporation Plc (“CEC” or “the Company”) advises shareholders of the Company and the marketplace that the Power Purchase Agreement or Bulk Supply Agreement (“BSA”) between CEC and ZESCO Limited (“ZESCO”) on November 21, 1997 is expected to expire on March 31, 2020.” said the company`s secretary, Julia Chaila. The Government of the Republic of Zambia (“GRZ”), through the Minister of Energy and zesco, have informed the CEC of their position that the BSA will expire on the above-mentioned date and will not be renewed. GRZ and Zesco expressed to the CEC their determination to continue to provide efficient and economical power supply to copper belt consumers during the validity period and after the BSA. KEK would like to underline its unwavering commitment to leverage its infrastructure and capabilities to ensure a seamless and seamless power supply to all copper belt consumers now and after the BSA. In the CEC`s view, the conclusion of a mutually acceptable electricity supply agreement between the parties remains of strategic importance to the electricity sector and the country. Therefore, the CEC remains confident that the parties will use the coming weeks to close the negotiating gap and thus reach the much-needed new electricity supply agreement. And Mwila explained that although Zesco initially did not enter into a new electricity supply contract to replace the now expired BSA by the CEC, the CEC will continue to supply electricity so that it can continue to supply its consumers who have already signed electricity supply contracts and supply Zesco`s existing consumers in the copper belt. THE CEC wishes to assure its shareholders and all stakeholders that it will do its best to ensure that any agreement it enters into is negotiated in good faith and reflects a fair outcome to ensure that the Company continues to operate as a continuing business thereafter. Dr. Kunda said in an interview that Zesco has successfully formalized agreements with Konkola Copper Mine (KCM), Chambeshi Mine, Kalumbila Mine, Lumwana and Kansanshi. In a statement yesterday, Mwila said the agreement between Zesco and KCM was part of the utility`s long-term strategy to correct power chain imbalances.

ZESCO Limited has entered into a long-term agreement with Konkola Copper Mines following the successful conclusion of negotiations,” said Patrick Mwila, Director of Strategy and Corporate Services. The same principle applies to the acquisition of an energy company, as was the case with the CEC when it was taken over by the government in 1997. The new owners had to be assured that CEC would be able to purchase electricity from ZESCO over a long period of time, as assurance that the assets they had just acquired (CEC) would not be rendered redundant by ZESCO bypassing those assets. Since the CEC had to sign electricity supply contracts with the newly privatized mines, a long-term agreement was needed to give new mine owners the assurance that they would have ongoing authority to support the long-term investments typically associated with mining. The CEC currently owes him millions of dollars for the supply of electricity under the recently expired bulk supply agreement. Last Friday, the CEC told its shareholders that Energy Minister Mathew Nkhuwa had informed management that the deal would not be renewed once it expires at the end of March. The Bulk Supply Agreement (BSA) also protected ZESCO`s interests, because at the time, the Democratic Republic of Congo was selling very cheap electricity in the region because the region had a huge surplus. Since the CEC grid was connected to the DRC grid in the past, there was always a possibility that the CEC would choose to buy electricity from there.

This would have meant that the country`s investment in electricity generation (Kariba, Kafue Gorge and Victoria Falls power plants) would be jeopardized, as the mines were the largest consumers of electricity. Therefore, the country considered it necessary to include in this long-term agreement between ZESCO and CEC a clause obliging CEC to purchase electricity from suppliers other than ZESCO only when the ZESCO allocation of 700 MW had been exhausted. This was a necessary condition for protecting the national interest. In the early years of the BSA, the electricity that the Democratic Republic of the Congo sold at low prices in the region generally accounted for one-third of the BSA tariff. At that time, after satisfying the local market, ZESCO had a surplus of up to 900 MW and could only export this surplus at rates equivalent to those of its competitors. “The energy sector needs cec as an already proven and second-placed key factor in Zesco in terms of functional responsibility in the power generation, transmission, distribution and supply portfolios. The energy sector most needs Zesco as the sole owner of 66% of the national installed capacity and more than 30,000 km of the national transmission and distribution network, as well as custodian of the functionality of the national control center/system operator,” Kaputu said. “The government`s decision on the imminent expiry of ZESCO – CEC BSA must be taken in the best interest of the country and in particular the energy sector.

The ambiguities regarding the courageous declaration that the ZESCO-CEC BSA after its expiry on the 31st. March 2020 “will not be extended”, needs to be clarified as soon as possible. To allay the concerns of mining owners and energy consumers in the Copper Belt Province in general, the discussion/negotiation of the zesco-CEC BSA issue needs to be accelerated, with the resolution taking place well before the expiry date of March 31, 2020. Mwila explained that Zesco was now able to compete for electricity supply directly to copper belt mining consumers who were able and willing to enter into new business relationships. .