Zambia Chamber of Mines says govt tensions with power firm CEC bad for investment

Energy Minister Matthew Nkhuwa issued a decree last Friday compelling CEC to allow others to transmit electricity via its infrastructure. Though it can negotiate terms, CEC said the energy regulator had also cut the tariff it can charge to 30% of the current price.

CEC, formerly a state-owned firm before it was privatised in the 1990s, said the directive and other steps taken by the government amounted to expropriation.

The Chamber of Mines said in a statement the decree could undermine CEC`s ability to supply power to the mining sector and spread a perception of increasing risk in the industry.

"The imposition of access and commercial terms on private infrastructure at levels that tip CEC into operational and financial distress have reverberated around the mining world," it said.

Relations between Zambia and the mining sector - one of its most vital industries - became tense last year after the country tried to impose higher taxes.

The government also appointed a liquidator to run Vedanta Resources local unit, Konkola Copper Mines (KCM), which raised concerns of resource nationalism in Africa`s second largest copper producer.

The government`s move concerning CEC came after the company said it would stop supplying power to KCM, currently at the centre of a legal dispute between the government and Vedanta.

Talks between CEC and state-owned power utility Zesco on a new bulk power supply agreement have also stalled.

CEC owns over 1,000 km of high voltage transmission lines and 43 substations across Zambia`s Copperbelt.

The infrastructure remains CEC property but other power producers, including Zesco could use it on agreed terms and conditions, Nkhuwa said.

The Chamber of Mines said the stalled negotiations and escalating tensions arising from the Zesco-CEC agreement could be resolved without denting Zambia`s investment climate.