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Annual Report Summaries, Investee Companies

Maamba Collieries Limited (MCL) Extract from 2022 Annual Report

Maamba Collieries Limited (MCL) reported total revenue of ZMW4.75 billion (US$278.68 million) for the year ended 31 December 2022 ((2021: ZMW3.96 billion (US$201.71 million)) and had a profit after tax of ZMW1.53 billion (US$89.95 million) ((2021: -ZMW222.03million net loss (2021: US$11.28 million net loss)).  

During the period under review, MCL continued to experience liquidity challenges because of delayed payments from ZESCO which stood at ZMW10.97 billion (US$606.79 million) as 31st December 2022. The Company undertook semi-annual maintenance shut down and forced shut down of unit 1 of the 150 MW thermal power units between 25 May 2022 and 7 June 2022. Nevertheless, plant availability was more than 85% for each of the first nine months of FY2022- 2023.The Company has a positive outlook in the medium to long term after the Arbitral Tribunal issued the Consent Award to MCL on 13 December 2022, which will see ZESCO pay US$447 million to MCL by 31 August 2023.  

There were no dividends declared during the year under review (2021: Nil).  

Arbitration Proceedings against ZESCO  

The Arbitral Tribunal issued the Consent Award on 13th December 2022. Through the settlement, MCL and ZESCO have agreed to irrevocably withdraw all their respective claims brought in the arbitration. The settlement has been recorded in the form of an enforceable final consent award signed and issued by the Arbitral Tribunal on 14th December 2022. The issuance of the final consent award ended the arbitration. The Consent Arbitral Award has since been registered in the High Court of Zambia for any further course of action that the claimants could pursue  

The Consent Award provides that from the total unpaid arrears under the PPA and TA as at 31st October 2022 of US$ 578.06 million, ZESCO will pay to MCL the Agreed Settlement Amount of US$447.56 million after MCL agreed to give ZESCO a discount of US$60 million on the interest portion of the arrears and ZESCO agreed to take on the responsibility of the VAT due on the total arrears amounting to US$70.5 million.  

Details of the Settlement as per Arbitration  

As part of the Settlement ZESCO will pay 50 percent of the Agreed Settlement Amount being US$ 223.78 million as follows:  

a. US$ 10 million to be paid no later than 29th December, 2022;  

b. US$ 20 million to be paid by 31st March, 2023; and  

c. the remainder by 30th April, 2023.  

ZESCO shall pay the remaining balance of the Agreed Settlement Amount no later than 31st August 2023.  

In addition, ZESCO shall continue to pay an additional US$ 750,000 every month towards liquidating the Agreed Settlement Amount.  

Should ZESCO default on any of these payment terms, the entire amount outstanding at the time of default will become payable to MCL immediately.  

ZESCO will indemnify MCL on demand for any liability on the VAT and any penalties and interest that may be paid by MCL in respect of the VAT.  

ZESCO has, in the meantime, discharged a few payments as per the terms of the Award, leaving a balance amount of US$ 414.56 million to be paid under the Award, as of 31 March 2023.  

There were no dividends declared during the year under review (2021: Nil).  

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