Energy industry players have called on the negotiating teams of the announced resumption of negotiations between national power giant -ZESCO and Copperbelt Energy Corporation – CEC to be conducted in a transparent and open manner.
Energy Expert Johnstone Chikwanda says the Bulk Supply Agreement-BSA negotiations between ZESCO and CEC should be fair and equitable to both parties and in line with the Energy Regulation Act of 2019, the final draft of the agreement must be submitted to the Energy Regulation Board (ERB) for oversight validation to ensure that it is fair.
Chikwanda said the two parties should resolve the contentious issues, which led to a collapse of the talks as the current negotiations present a chance to correct the abnormalities in the document that led to failed renewal of the agreement, which expired in March 2020.
In an interview with the Zambian Business Times-ZBT, Chikwanda explained that the negotiations should be done to ensure Zesco, which is currently faces financial challenges, remains sustainable amid reforms of the power utility that will see the declaration of some of the assets as “common carrier” returned as enshrined in the electricity Act.
He said previously, Zesco alarmed the nation that it did not want to renew the BSA because it was suffering colossal losses in millions of dollars due to this BSA and that it was not a fair contract. The contract was reported to have favored CEC at the expense of ZESCO.
“As experts we called for the public disclosure of the BSA in order to make informed comments but it was not done other than saying CEC was getting cheap electricity from Zesco and putting markups and generate a lot of profits at the expense of ZESCO”, he said.
Chikwanda noted that repeated statements from the previous regime about how the BSA disadvantaged ZESCO and only benefited CEC must compel the parties to review all the contentious clauses and arrive at a win-win point especially now that Energy regulation Act empowers the energy regulations board – ERB to validate any power supply agreements ZESCO enters into.
The Zambia Energy Forum Chairperson told ZBT that there is need to rethink the CEC business model, as it cannot continue to be depending on ZESCO for supply of electricity because ZESCO is a also a competitor when you look at it from an overall industry perspective.
He said CEC needs to invest more in building its own power plants as the future of the energy sector is that the common carrier concept is here to stay and both Zesco and CEC need to brace themselves for the common carrier status which allows other suppliers of electricity and traders to use their facilities at a fair tariff whose ceiling is set up by the regulator in line with Electricity and Energy Regulation Acts of 2019.
Chikwanda said the declaration of power transmission lines as common carrier, remains the viable option to unlock the future of the country’s energy sector to avoid uncompetitive behaviour by those who own the infrastructure if private investors are to enter the market.
He adds that common carrier option for both ZESCO and CEC lines will ensure investments into the energy sector at competitive prices with oversight from the ERB done in good faith to allow for a favorable outcome.
ZESCO is a state owned jewel that continues to attract speculation of being a target for privatization for successive governments in Zambia. The power utility has potential to become a Pan African energy giants but political interference in its operations and strategic moves continues to derail its potential.
