Economist Yusuf Dodia has emphasized the need for Government through the Zambia Consolidated Copper Mines Investment Holdings – ZCCM – IH to have a checklist of the commitments made by Vedanta Resources in regards to the operation of Konkola Copper Mines – KCM if the country is to have great benefit economically.
The Zambia Consolidated Copper Mines Investment Holdings – ZCCM – IH and Vedanta Resources Limited Company have signed two agreements to revamp the operations at Konkola Copper Mines – KCM with several pledges from Vedanta resources.
Speaking in an exclusive interview with the Zambian Business Times – ZBT, Economist Dodia hoped that the agreement signed between ZCCM – IH AND Vedanta resources has in it milestones and targets set accompanied with consequences or penalties if the agreed commitments are not met.
Dodia said with “with agreements, the devil is in the detail” hence depends on what details have been put into the agreement. He mentioned that from experience Zambians sign a lot of agreements and in many cases the investor does not honor the commitments made in the agreement. “But the problem is that there is also no penalty or sanction for not honoring the agreement” said Dodia. He is therefore hopeful that the agreement signed between ZCCM-IH and Vedanta Resources in respect to Vedanta continuing to operate KCM that there are milestones and targets set in the agreement which come with consequences or penalties.
Dodia recalled that in the last relationship between ZCCM-IH and Vedanta Resources, Vedanta was ready to put KCM on care and maintenance because they did not have the resources to recapitalize the business. He is hoping that this has been taken care of, with milestones and targets set, as well as penalties in place. He said this gives the freedom to be able to remove them as operators of KCM if it so happens that they forego their commitments, and find new partners that are more committed and have the resources.
Dodia is of the view that the most important and legal mechanism at hand is for ZCCM-IH to have a checklist of the commitments that Vedanta is making towards the operation of KCM, and follow the checklist to ensure that Vedanta is meeting its obligations. He said if Vedanta fails to meet the set obligations, ZCCM – IH should be quick to take action to remedy the situation.
He further added that it is important for government to look at the capacity of Vedanta resources adding that there are allegations that points to the difficulties Vedanta is going through abroad in terms of meeting its obligations to pay off bonds that they had issued and other financial commitments that is forcing them to look for investor partners to bail them out.
“That should impact on our relationship with them because on the one hand we are noting that they are facing difficulties in running the international operations, and on the other hand making commitments to Zambia which might be in contradiction to what is happening on the international scene” said Dodia. He said it is important that this should be taken into account following the signed agreement, and in terms of the monetary mechanism they are putting in place.
