Thu, 24 Aug 2017 12:54:49 +0000
The Mopani/CEC impasse indicates a complete breakdown in corporate governance.
It puts into question the significance, import or indeed rationale of the government of the Republic of Zambia, being represented in both organisations by firstly the golden share held by the Minister of finance as well as corporate representation by ZCCM-IH which holds shares in both CEC and Mopani.
What is the point of government owning these shares and then failing to mitigate at a time of need resulting in catastrophic consequences such as suspension of operations leading to revenue losses and a threat of job losses of up to 5000 miners?
Corporate governance embodies a framework of rules and procedures that governs relationships within an institution as well as intra and inter institutional relationships.
In this regard our understanding is that the relationship between CEC and Mopani, together with mines is governed by a power supply agreement that is valid and legally enforceable.
It was therefore up to the parties to adhere to procedure and act accordingly. Therefore it would have been expected that ZCCM and the Ministry of Finance should have first of all prevailed on CEC not to precipitate action before taking measures that should have culminated in arbitration.
Understandably Mopani in frustration must have sought judicial intervention to restrain both CEC and ZESCO from enforcing the power restriction exercise.
These excesses would have been unnecessary in a relation and among institution that have proper corporate governance indicating explicit and implicit contracts and obligations for the stake holders.
That political influence was brought to bear indicates a serious breach not just in governance but in the separation of roles and responsibilities governing industry and the role that government should play.
Under the one-party state, it was normal and common place for government to issue directives and decrees regardless of prevailing circumstances and conditions within affected institutions.
But with liberalisation of the economy greater latitude has been provided through incentives and legal guarantees to protect investors against arbitrary and in some cases capricious dictates that could imperil efficiency and effective operations of business entities.
That is why the conflicting and often intimidatory statements have not sat well as they seemed to undermine logic and proper corporate governance given that the facts and dynamics operative in the relationships among the affairs of the various operatives should have been taken into account through arbitration rather than coercive measures.
We are not at this stage concerned over whether or not ZESCO, CEC or indeed Mopani were right or wrong we are rather concerned by the manner in which the dispute has been allowed to degenerate to the level where the country loses revenue and is about to lose jobs.
The parties to the power supply agreement deserve a hearing to determine the validity or otherwise of their concerns and therefore a proper structure for resolution could be considered to facilitate speedy and expeditious resolution.
The generic statement of conformity could very well be misplaced because of the conditions and circumstances under which a particular operation may find itself which deserves special consideration.
Our view to which we stand by is that whatever has happened is a complete and total failure of corporate governance which puts into question the need for representation by the government in these business institutions more specifically the role that ZCCM IH should have played within CEC which is no more than an intermediary and briefcase supplier
