By Shapi Shacinda
LUSAKA (Reuters) - Zambia and foreign owners of its copper mines agreed a 35 percent power tariff increase effective January this year, and authorities have warned of possible power cuts to the mines due to a power generator fault.
"All the mines have accepted the proposal to raise tariffs by 35 percent and we are just waiting for ZESCO Ltd to sign the agreement. The increase will be with effect from January 1 this year," Copperbelt Energy Company (CEC) chairman Hanson Sindowe told Reuters in an interview on Wednesday.
CEC buys power from state power utility ZESCO and distributes it to the mines.
Sindowe also said the sole power distributor was negotiating with the government to provide partial funding for the construction of the hydro-electric Kafue Gorge Lower power project, which is estimated to cost around $1 billion.
About 750 megawatts (MW) of power will be generated at the Kafue Gorge Lower project. The government said last week that some foreign mining firms would partially fund the project.
Sindowe said the new tariffs would be implemented once ZESCO Ltd., signs the agreement with CEC and the copper mines.
Sindowe declined to give details of the new tariffs after the increase only saying, "the tariffs vary from one mine to the other because we have different agreements with them".
Zambia's biggest copper producer is Konkola Copper Mines (KCM), a unit of London-listed Vedanta Resources.
Others are Mopani Copper Mines, a venture of Swiss firm Glencore International AG, First Quantum Minerals and Chibuluma Mine, a unit of Metorex. Australia's Equinox Minerals owns Lumwana Mining Plc.
Sindowe said power supply had improved to the copper mines after four nationwide blackouts in January forced copper and cobalt producers to trim output.
GENERATOR REPAIRED
ZESCO spokeswoman Monica Chisela separately told Reuters that a broken-down generator at Kafue Gorge had been repaired.
"The machine (generator) has now been repaired and re-commissioned. However, we are still in a power deficit situation and rationing of power will continue because we are unable to secure additional imports from anywhere to meet the power demand," Chisela said.
Chisela said the generator which had broken down was supplying 150 megawatts of electricity onto the national grid.
But Sindowe said the situation still remained 'precarious' because demand for power was increasing while supply was low and that this had forced the CEC to venture into power generation.
"The CEC is now looking at getting involved in generation of electricity and we are negotiating with the government to expand into power generation," Sindowe said.
Sindowe said the government was encouraging private-public partnerships in power generation projects to avert serious looming power shortages in view of rising demand by industry.
The CEC plans to build a 40 MW power plant north-west of Zambia, to cost between $80 million and $100 million, he said.
Zambia was still importing 100-150 megawatts of power from the Democratic Republic of Congo for the mines, he said.
