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 2010-03-05 06:03 pm Back to NEWS
ZESCO cedes optical fibre cable to Zamtel

ZESCO has finally been forced to cede its optical fibre cable to Zamtel but still has to settle the US $13 million loan for laying it, highly placed sources have revealed.

Since the advent of the Zamtel privatisation process last year, the government had been exerting pressure on Zesco management to have the power utility company's over 1,700 kilometre optical fibre network sold as part of Zamtel assets.

The move by the government to forcibly transfer the optical fibre was aimed at raising the profile of Zamtel by getting the Zesco network, which would automatically translate in an increase in RP Capital Partners of Cayman Islands’ fees or commission when Zamtel is sold at a higher value.

Sources close to the transaction told the Business Post that apart from enriching the profile of Zamtel, the shift of optical fibre would also allow Zesco to concentrate on its core business of power generation, supply and transmission.

The sources said the move to grab the optic fibre from Zesco had angered some engineers in the power utility especially those in the department that laid it.

“How do you expect us to be happy when for all the sweat we put in laying this optic fibre, someone just comes and say ‘give it to Zamtel for no sensible reason…this is so frustrating and demoralising but obviously there is no one who can oppose such a move because everyone in Zesco is scared of Honourable Kenneth Konga. But I guess there isn’t much we can do because we all need to protect our jobs,” the source explained. “The contract to get the optic fibre was signed in December 2009 and under the terms, 80 per cent of the revenues from optic fibre will go towards Zamtel and 20 per cent towards Zesco, yet we Zesco are expected to pay back the loan which we used to lay the fibre optic… how do you explain that? This is our cable and we wonder why Zamtel should get 80 per cent of the revenue when they also have also been digging their own optic fibre.”

The Zesco optical fibre has been a source of controversy after attempts by the government to wrestle the network from the power utility to Zamtel in the third quarter of last year were exposed.

Well-placed government sources yesterday disclosed that President Rupiah Banda, through his two named advisors, engaged Zesco over its optical fibre network.

“It appears this Zamtel and RP Capital Partners scandal is one that will never end. And it’s clear that the architects of this saga are unrepentant and are determined to bring down a number of state institutions just to satisfy themselves,” the source revealed.

The Zesco optical fibre network project was being done in phases at a huge cost with the first phase already laid from Sesheke up to Lumwana in Solwezi at a cost of about US $13 million.

The network is linked to the international gateway in Namibia while the second phase was expected to cover the whole country and preliminary projections indicated that the project was likely to gobble about US $30 million.

The sources also revealed that following the grabbing of the optical fibre from Zesco, Zamtel, under the new owners, would develop the second phase of the project.

The sources disclosed that the Zamtel optical fibre network project flopped.

“One thing you also need to know is that the Communications Authority gave Zesco what is called ‘A Carrier of Carriers’ licence in about 2006. But I think it only became operational in 2007,” the source said. “Zamtel… the same company they want Zesco to give its optical fibre network tried to install its own network and they failed. They have even abandoned that project right now as we are talking.”

The sources also disclosed that following the decision by Kenya’s biggest mobile-network operator, Safaricom, to lease capacity on Kenya Power & Lighting Limited’s fibre optic cable as a way of minimising vandalism-related losses as the link runs on overhead lines, the proponents of the Zesco/Zamtel deal wanted to use the move to justify their intentions.

According to media reports in the biggest economy in east Africa, Safaricom was to lease a pair of the 48 optic fibre links on the cable for 20 years at 288 million shillings US .8 million a year, and will transfer data traffic to the Kenya Power fibre link.

Safaricom chief executive officer Michael Joseph told reporters in the capital, Nairobi that: “Hopefully this era of vandalism, sabotage will be a thing of the past.”

The company estimates that it loses as much as 20 million shillings in revenue each year because of damage to fibre-optic links that are laid underground.

Safaricom owns 22.5 per cent of the East African Marine System fiber-optic cable that links Kenya to Fujairah in the United Arab Emirates, giving it capacity of 22,500 megabytes.

It also bought 620 megabytes of access to a cable owned by Seacom Limited, Safaricom.
Kenya Power, the east African nation’s monopoly power distributor, started the fibre project in 1989 to better manage the national transmission and distribution grid. The network cost 1.9 billion shillings to set up.

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