(Adds minister detail, KCM statement)
LUSAKA, May 31 (Reuters) - Zambia’s Copperbelt Energy Corp (CEC) will stop supplying power to Vedanta’s local unit Konkola Copper Mines (KCM) from Monday, it said after talks on an extension to their supply agreement broke down over debt owed to CEC.
Zambia’s Energy Minister Mathew Nhkuwa told Reuters that KCM would now receive its power directly from state-owned utility Zesco, which has previously sold electricity to CEC for onward supply to KCM.
Nkhuwa said the bulk electricity supply agreement between Zesco and CEC, which expired on March 31, would not be renewed.
The power supply agreement between CEC and KCM also came to an end on March 31 and was extended through mutual agreement only as far as May 31, CEC said in a statement on Sunday. KCM owes the energy company $132 million, CEC said.
“Negotiations for its further extension have broken down, despite CEC’s best efforts in good faith towards securing a new contract,” the statement said.
A KCM statement statement said that, after the expiry of its contract with CEC, the company had entered into another agreement with Zesco, effective June 1.
“We expect a seamless transition in the supply of power from CEC to Zesco and any interference or restriction will be an act of sabotage,” KCM said.
In trying to agree the new contract, CEC sought to resolve KCM’s outstanding $132 million debt and also obtain a firm commitment from KCM on timely payment of future electricity charges, it said.
CEC said it had informed KCM that its supply will be discontinued, adding that this was the only option available after the failed talks.
“Due care has been taken to make certain that the process of discontinuing supply ensures the safety of personnel and equipment and preserves the integrity of the mine,” CEC said.
India’s Vedanta owns about 80% of KCM.
While Zesco will now transport power to KCM, it will still travel through CEC power lines. Nkhuwa said that CEC would be breaking the law if it refused to transport the power.
“I issued a statutory instrument on Friday, declaring the CEC lines a common carrier. CEC is therefore obliged to transport the power from Zesco to KCM at a fee,” Nkhuwa said. (Reporting by Chris Mfula Editing by Susan Fenton and David Goodman)