Electricity supply company, CEC Zambia Plc., expects to post weaker results at half year 2019 due to weaker collections caused by delayed payments from one of its customers.
“In accordance with the Lusaka Securities Exchange Limited (“LuSE”) Listings Requirements, the Board of Directors advises the shareholders of CEC (“the Company”) that for the six months ended 30 th June 2019, the basic earnings per share and headline earnings per share, respectively, are expected to be 60% lower than for the six months ended 30th June 2018”, read a statement issued by its Company Secretary Julia C Z Chaila, on 27th August 2019.
The company which has a Bulk Supply Agreement (BSA) with the national power company, re-sales electricity locally to 8 mining companies, and exports to Congo DRC through a 220kV interconnector it owns which has a capacity of 250MW and supplies electricity to mining customers in the Katanga Province.
“The reduction in earnings is primarily attributed to impairment of receivables arising from delayed and/or non-payment of power invoices by one of our customers”, further read the issued statement which confirms that the one of its customers had run into a spot of trouble and had not been able to pay its bills.
One of the Mining Companies that CEC supplies electricity to is Konkola Copper Mines (KCM), the Vedanta Resources Plc company that has been in debacle for some months now. In 2018, CEC had issued a power restriction order over payments. Prior to that, according to the Daily Mail, in 2014 CEC had issued a power restriction over an estimated debt of $44 million which it was owed. At present, the mining company is caught in a legal battle that has seen its 20% shareholder ZCCM file a court order placing the company in liquidation.
Although the SENS Announcement does not indicate which company owes CEC money, “shareholders are advised that the information contained in the trading statement had not been reviewed or reported on by the external auditors of the Company”. At the time of publishing this article, CEC Zambia’s security on the Lusaka Securities and Exchange (LUSE) was trading at K1.33.