Wed, 16 Aug 2017 11:55:45 +0000
THE tussle that has ensued between the Copperbelt Energy Corporation (CEC) and Mopani Copper Mines (MCM) among other mines over the implementation of revised electricity tariffs to the mines shows how irresponsible relevant ministries have been.
Whatever tthe problem, it is incomprehensible and inexcusable that mines should close at a time copper price is at an all time high.
It is shocking that the Ministry of Energy and Ministry of Mines seem complacent and not concerned with the crisis in the mining sector which is our economic backbone and mainstay. Instead of explaining the fact, the issues in contention are before courts of law.
The truth is that early this year, ZESCO, a government parastatal, applied to the Energy Regulation Board (ERB) for electricity tariff adjustments to meet operational challenges as well as to attract investment to the sector.
When the ERB approved the upward tariff adjustment, it clarified that the mines were not party to the tariff decision because the supply of electricity to mining companies is governed by bilateral agreements between ZESCO and individual mines.
Put simply, ZESCO’s application did not include mining tariffs because mines have separate agreements with electricity companies.
In this vein, the terms are negotiated on a case-by-case basis between the mine and supplier and contracted through Power Purchase Agreements (PPAs). Under this arrangement, the ERB is then engaged to ratify the PPAs after the two parties have reached an agreement.
We know that CEC does not produce electricity. Instead, it buys power on wholesale from ZESCO and re-sells it to the mines on the Copperbelt.
If ZESCO’s application excluded the mines from tariff adjustment, when did the ERB ratify the CEC’s upward adjustment of power supply to the mines?
The power supply standoff between CEC and MCM shows disagreement on the modality of effecting the new tariff. Certainly, the decision by the CEC to restrict supply to MCM will not only affect the mining operations but also Government’s revenue base.
So far, MCM has confirmed to have suspended production operations in Kitwe and Mufulira due to this restriction of power supply. Consequently, all employees in affected operations have been sent home.
Much as the MCM has indicated to continue paying salaries to all its affected employees, the mere fact it has suspended production operations means both the company and government will incur losses. There is no production taking place.
How does Government hope to get revenue from a mining company which has suspended its production?
The laissez faire attitude towards the electricity impasse exhibited by the two ministers of Mines and Energy leaves much to be desired and is totally unacceptable.
And to watch the dispute between the two firms degenerate to this level where Mopani, the copper-mining giant which had this year started re-employing some of its members of staff who were released following a slump in copper prices and inadequate power supply in 2015 suspend its production operations is utter irresponsibility and toying with the economy.
It is undeniable that mines are one of the biggest employers on the Copperbelt, with more than 30,000 direct and indirect jobs in their books. Why should relevant ministries not intervene to save looming job losses?
What is even disappointing to observe is that the Energy Minister Mr David Mabumba could issue a statement which does not give hope to the plight of MCM and its employees by siding with CEC without realising the economic implication of the continued closure of the mine.
In our view, it is wrong for CEC to hold mines to ransom. We think the power supplier should rescind its decision of restricting power supply to the mining companies on the Copperbelt and respect the injunction granted by a court of law in that regard.
