Konkola Copper Mines (KCM) on the hook for $44m in unpaid electricity bills
Copperbelt Energy Corporation (CEC) recently reduced the power that they supply to Konkola Copper Mines (KCM) over unpaid bills totalling $44 million. According to KCM, the power supply disruption has so far cost them 482 MT of copper worth $3.3 million and has caused the flooding of one of their mine shafts. The Minister of Mines stepped in and ordered KCM to pay the bill and CEC to restore power.
One cannot blame CEC for their actions because $44 million is material to their earnings (16% of FY13 revenues) and they have their business and shareholders to worry about. Vedanta owned KCM has had well documented financial issues which prompted the government to ‘help’ them develop a plan to get them out of the rut (things must be really bad for that to happen!). This begs the question, what is the end-game for KCM in Zambia? Do they need a new owner who is more experienced in copper mining? The way things are looking, it wouldn't be a surprise to see KCM put up for sale in the near future.
ZESCO signs 300MW deal with EMCO Resources
ZESCO signed a power purchase agreement with EMCO Resources BV who will be building a 600 MW coal-fired thermal power plant in two phases which will cost them in the region of $700 million. The agreement is similar to that which ZESCO has with Maamba Collieries 300 MW project which should be fully operational sometime in 2015. As of 2014, Zambia has a generation capacity of 2,310 MW with the majority of it being powered by hydro. Over the next 3 year, we could see as much as 900 MW of coal-fired electricity injected into Zambia’s growing energy grid.
However, it is a fact that pollution will also be produced by these plants which will adversely affect the people of Sinazongwe as well as add to Zambia’s carbon footprint. Coal is a finite resource so the projects should only have a lifespan of 20 to 30 years. Should Government policy be more focused and favourable to Solar and other renewable energy projects which don’t add to the climate change problem? Yes because agriculture has more potential than energy production for Zambia so it doesn’t make sense to go with coal at the expense of future agricultural production (i.e. approving projects that will solve energy problems for 20/30 years at the expense of agriculture which could last for generations). It’s something to think about.....
Post Newspaper offices raided by ZRA over K26.8m tax bill
Offices of the Post Newspaper were raided this week by a combined team of Zambia Revenue Authority (ZRA) officials and Zambia Police. This stems from recent revelations that the publication is on the hook for a K26.8 million tax bill, inclusive of penalties. The bill has been accumulated over the last 3 years. The publication managed to obtain a court order stopping the ZRA from seizing its property.
No matter which way this is spun, it has brought to light the issue of selective enforcement. How much money is not collected because an entity is perceived to have connections in high places? This is especially unacceptable in a time when 50 to 60 percent of the national budget is being consumed by wages/personal emoluments!
Finance Bank takes step in preparation of IPO
Finance Bank Zambia officially converted into a public limited company in preparation of listing on the Lusaka Stock Exchange. They will become the third domestic bank to be listed on the exchange together with Zanaco and Investrust. Initial Public Offerings (IPOs) are a long and expensive process – it will be interesting to see if Finance Bank can get it done before the year is over.
Kwacha closed at K6.26 per USD, K10.17 per GBP, K7.94 per EUR and K0.56 per ZAR
September inflation came in at 7.8% and August trade balance at surplus of K98.4 million
LME 3-month Copper seller price closed week at $6,721 per MT
The LuSE all-share index closed the week at 6,222.36, up 0.22%.
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *