Wed, 23 Aug 2017 12:50:18 +0000
Why are Ministers defending the Copperbelt Energy Corporation (CEC) in the “Electricity” impasse which may lead to the loss of 4,000 jobs in addition to the drastic losses in production?
We find this extremely puzzling, considering that Mopani is partly owned by Government through ZCCM-IH.
Firstly, it is common knowledge that CEC does not produce power. Power is generated and transported by a Government controlled parastatal, Zesco.
Secondly, CEC is a private company, which wholesales Zesco generated power to the mines at a premium under very specific agreements, among which is a provision for dispute resolution.
As we understand, CEC has unilaterally restricted power on account of a disagreement over the rates being applied.
CEC could have invoiced arbitration as required by the agreement but chose instead to restrict this power and disrupt production and endanger jobs, why should Government support this action when other less drastic remedies
exist?
According to the statement issued by Mopani, the agreement has provisions of clear steps to be taken in the event of an impasse on tariffs, which dispute resolution steps appear to have been disregarded.
We have asked before and would want to repeat, who stands to gain from the current impasse?
It cannot be the country which loses revenue from lost production and it cannot certainly be the mining companies which lose revenue while remaining committed to pay workers who must stay away from work.
CEC loses nothing apart from reduced profits. This is not correct. Time has come for the Government to look at the power structure again because the scenario we are witnessing is not new and neither will it be the last.
CEC was established by then private mining companies to service their power needs. Somehow during privatization the unit was privatized as an independent unit. This could be the genesis of the problem.
There is no doubt that if the unit had remained part of the Government or indeed if it was controlled by the Mining companies themselves this sad impasse would not have arisen, because their core business would have dictated against it.
We have said before and would like to repeat that restricting power to the mines to force an agreement is akin to self-sabotage.
There is a saying we have used before, namely “Cutting off the nose to spite the face”. This expression is used to describe a needlessly self-destructive over-reaction to a problem. It is a warning against acting out of pique, or against pursuing revenge in a way that would damage oneself more than the object of one’s anger.
This standoff is damaging the country more than all the parties involved, because it is depriving the treasury the proceeds of production that has been lost. Zesco is losing the revenue that should have been earned from the electricity that has gone to waste. Once generated the power cannot be banked for future use.
Perhaps more importantly the impasse is a display of impunity and disregard for the rule of law and laid down procedures.
Why has it proved difficult to subject the impasse to arbitration as provided for in the power supply agreements?
We fully appreciate that the government would like to make the power sector attractive for investors by reviewing rates. However this should not be done at all costs without considering specific circumstances.
This is the same generalization that has now affected the maize marketing exercise where technocrats take decision of far reaching import ance without consulting the relevant parties.
Liberalization and cost recovery are a fact that the country, industry and individuals have come to accept, but this is a policy that must be implemented with circumspection to avoid negative consequences that may have lasting negative effects on the economy.
