By Patson Chilemba
Simon Miti persuaded former president Edgar Lungu to fire me because I was making the work of micro managing Zesco by bureaucrats very difficult, says Dr Mbita Chitala.
In his book Corporate Capture, the Political Economy of Electricity Management in Zambia 2014-2021, (How Not to Manage a State Enterprise), first obtained by Daily Revelation upon its publication, Dr Chitala stated that he frustrated efforts to asset strip Zesco after the Industrial Development Corporation (IDA) incorporated another company by the name of Infratel Limited and gave it the mandate to asset strip Zesco of the fibre network and pass over to a new company.
He argued that against that move, Zesco informed Infratel and IDC that Zesco had invested heavily on the infrastructure on the optic fibre network with aggregated total investment of US$110 million and that both interest and the principal amounts were still unsettled, saying based on that the company’s board resolved that Fibrecom proceed with a normal lease arrangement with Infratel as opposed to the indefensible Right of Use.
Dr Chitala stated that this would be on condition that Zesco determined where such requested capacity of fibre was available for use by Infratel as and when it suited both sides.
He stated that on behalf of Zesco he briefed the IDC about the matter and the resolution of the board at a meeting in December 20 in Livingstone, and that the meeting was attended by then Finance minister Dr Bwalya Ng’andu.
“This matter again was not well received by the IDC bureaucrats who thought that I was insolent to them. It was another of the reasons that they again resolved that I was too much of an influence and that I was making work of micro managing the subsidiaries difficult,” Dr Chitala stated. “They subsequently reported this to the Secretary to the Cabinet Dr. Miti who persuaded the President to let me go. Instead of being dismissed, and having been informed of the resolution of the IDC, I announced my retirement from ZESCO before I was humiliated by a dismissal. I did this because I did not want to start a controversy that would be futile.”
Dr Chitala explained how the whole Infratel matter started after he received a letter from IDC chief executive Kaluba.
“In clear case of abuse of office, the IDC incorporated another company by the name of Infratel Limited and gave it the mandate to asset strip Zesco of its Fibre network and lass over to this new company,” Dr Chitala stated. “On 7th February, 2019, the IDC Chief Executive Mr. Kaluba sent to me a letter in which he informed me that the IDC Board of Directors had resolved that Information and Communication Technologies (ICT) assets which were owned and managed by different entities in which government had a direct or indirect interest should be rationalised to ensure their utilization was optimized and avoid inefficiencies, unnecessary duplication and wastage of resources.”
He stated that in the same letter Kaluba informed that IDC had directed to establish a national telecommunication infrastructure enterprise that would own and manage all ICT core Infrastructure owned by the public sector, which assets would include the Zambia National Data Center Limited managed by ZICTA; the GRZ/Huawei Project Towers; GRZ’s rural towers managed by ZICTA; ZAMTEL’s towers; and the fibre network owned by ZESCO under Fibrecom Limited.
Dr Chitala further stated that Kaluba informed him on August 23, 2018 that the IDC had incorporated the national telecom infrastructure company – Infratel Corporation Limited and that an implementation project team to spearhead the transfer of public sector telecom infrastructure had since been appointed under the IDC, and that Infratel’s formative stage had commenced with the transfer of ZICTA’s National Data Centre and progress too had been made with ZAMTEL regarding the transfer of its tower infrastructure to Infratel as well as the transfer to Infratel of towers from ZICTA tower infrastructure.
“Kaluba then demanded that ZESCO should also surrender its fibre infrastructure to Infratel,” he stated.
But that in his reply dated April 03, 2019, he reminded Kaluba that he should have first addressed his letter to the Zesco managing director Victor Mundende instead of him as chairman as he was not an executive chairman of Zesco.
Notwithstanding that, Dr Chitala replied to Kaluba that the Fibrecom telecommunication asset of Zesco was an integral part of the country’s electricity generation, transmission and distribution, which cannot be owned and operated by a third party, saying in terms of efficiency, relying on third party to investigate and rectify communications failures during power outage will also just lead into destabilising the country.
He stated that arising from the above, only Zesco engineers can service the fibre network and not a third party, as most Fibrecom terminal equipment is located at Zesco sub-stations and therefore Kaluba’s demands were not sustainable as they presented a challenge in terms of operations and maintenance.
“The ZESCO Fibrecom network is one of the anchor for National Security as it acts as a protective mechanism in the operations of ZESCO Limited. All National electricity utilities in the Sub-region own and manage their fibre networks for the same reasons of security and efficiency. This is to ensure network security of services through the SCADA systems, Tele-protection, the BIS, including the control of such parameters as the 50H3 frequency monitored and controlled by ZESCO and are integrated in the platform through the Fibrecom fibre network and monitors in real time from NCC,” Dr Chitala stated.
He further told that Zesco’s membership with the Southern African Power Pool (SAPP) would be at risk as most SAPP members rely on the Zesco Fibrecom network and the National Control Centre (NCC) to manage their systems as ZESCO is a designated SAPP control area.
Dr Chitala stated that Zesco using the Fibrecom Network was in an advanced stage of implementing the Smart Metering System to improve revenue collection in light of government stopping all subsidies to Zesco, and that US$102 million had been spent on the optic fibre network and is mounted in the Zesco transmission grid to all provinces.
He argued that the loans the company had contracted especially from the financial institutions in China were anchored on the government’s sovereign guarantees as well as on revenues of Fibrecom who had set up escrow accounts to service them and any adverse conduct to change or alter agreements may cause a run on both Zesco and government as it occurred at great cost to the Republic when some people announced without authority the restricting of servicing loans.
Dr Chitala stated that the Fibrecom network was anchored on Zesco powerline especially the Optic Fibre Pilot Ground Wire (OPWA) which also acts earthing to protect Zesco pylons, lighting protection and short-circuit current localization, saying these cannot be co-owned or out-sourced to third parties as they are integrated within the Zesco power network.
Dr Chitala also argued that the necessary laws, the ERB Act, the Zambia Bureau of Standards Act, The Electricity Act Cap 436 of the laws of Zambia must be amended to allow for this change complication in compliance with regulatory requirements on security, power quality safety and reliability of the channels being managed by a third party cannot be sustained.
He stated that on the basis of these grounds, he informed Kaluba that Zesco could not let go of its fibre network to a third party Infratel, and that given its historical background Fibrecom asset base could not be separated from Zesco Limited.
Dr Chitala said it was common knowledge that the secure and reliable operation of any power system relied on the prompt and accurate exchange of information between the electrical installation and the intelligent devices that formed part of the operations decisions platform, and that power utilities world over have embedded telecommunication units in their grid network to facilitate these operations.
He stated that ZESCO, through FibreCom, had installed an extensive high speed broadband telecommunication network of optic fibre connecting to all the 10 provincial centres of Zambia including surrounding districts with accumulated cable distance of over 8,700 Kilometers, and that Zesco was the only company at the time which had the widest optical fibre coverage.
Dr Chitala stressed that electricity was a product that was produced and consumed at the same time, hence the need to closely monitor and control its production, transmission and consumption and the automation of such operations could not rely on third party telecommunications operators hence the need for the power utilities to deploy and operate their own telecommunications network, and that this was the more reason why telecommunication infrastructure was integrated in the power transmission networks of all electricity companies globally.
He stated that in August 2017, Zesco incorporated Fibre Com as a company limited by shares with a nominal capital of K1,000,000 diviend into 1,000,000 shares of K1.00 each, saying Fibrecom was expected to be efficient and effective in meeting the requirements for both internal and external clients.
“The geographical central location of Zambia with eight neighboring countries made an ideal communication hub for transiting and relaying digital traffic from all directions within the region. Zesco therefore commissioned an Asset verification and evaluation project,” Dr Chitala stated.
He stated that FibreCom provided an extensive range of products and services which included Zesco internal operations; Internal Gateway; Digital Leased Lines; Carrier Ethernet Transport; and International Traffic Transiting, and that in future Zesco planned to provide through the FibreCom Limited subsidiary additional services on the Metropolitan Network such as Broadband Internet, Enterprise Wide Area Networks and Hosting (Email, Web, domain).
He said it was clear that the Zesco FibreCom was a critical component to Zesco’s business and the security of the country’s electricity supply industry, and that its primary role of providing communication service to Zesco guaranteed a reliable and secure power system fit to drive the social economic activities of Zambia.
“The three key areas that FibreCom provided which were critical to Zambia include the following: First was the Security and Efficiency of the operation of power system which was most important in the provision of electricity and related services to the country. The reliability of SCADA systems across the value chain that relied on dedicated telecommunication network, without a dedicated communication infrastructure, ZESCO’s business would collapse,” Dr Chitala stated.
But the IDC bureaucrats refused to accept the reasoning of Zesco and on March 13, 2020 caused their new company Infratel to make a proposal to lease fibre capacity (6-cores) from Zesco instead of taking over all the FibreCom infrastructure and in the process created a security risk in Zesco operations, Dr Chitala stated.
He stated that Infratel proposed that part of the Zesco optical fibre strands (cores), six in Number be shared to Infratel under and Indefeasible Right of Use (IRU) for a term of 10 years renewable at expiry, and in return, Infratel would commit to paying an annual fixed amount of K14.5 million and sharing (2.5%) of its monthly on transmission revenue with Zesco.
Dr Chitala stated that Infratel wanted an IRU even where such an IRU would take away availability of the infrastructure from Zesco’s core function of supplying reliable and secure electricity power across the Zesco grid.
“Infratel further proposed that Infratel Limited would bear the cost of installing cross connect optic fibre at Zesco drop-off points to the INFRATEL DWDM node and also bear the cost for deployment and operation of nice equipment and systems. Infratel futher suggested that there should be a Fixed Fee – Monthly Recurrent where INFRATEL would pay ZESCO an annual fixed fee of node of ZMK 14.5 million. This would be paid quarterly, that is, ZMK3.62 million per quarter and that as regards the Revenue Share – Monthly Recurrent, INFRATEL would share to Zesco 2.5% of its transmission revenue on a monthly basis,” he stated.
But Dr Chitala stated that Zesco replied that the Indefeasible IRU agreement was a contractual agreement associated with telecommunication systems that could not be done, saying the IRU gave the right to the customer to assume co-ownership of the communication system during the tenure of the agreement and could not be revoked or annulled.
“The Transfer of Fibre cores to Infratel would negatively impact on Zesco’s internal operations including future network expansions. This would be detrimental to the growth of Zesco in the development of a smart grid in the country and the region at large,” stated Dr Chitala. “ZESCO informed Infratel and IDC that the Fibre cores that were not in use at that time were reserved for the following (23) projects to implement a smart grid…Implementation of the above projects was a phased approach and was purely dependent on the reserved fibres.”
He stated that Infratel had requested to be granted six core of Dark Fibre from Zesco Limited at an annual fixed fee of K14.4 million plus 2.5 percent of its sales over an initial period of 10 years and renewable thereafter, but Zesco informed IDC that the company had standard billing price schedule for its customers based on request routines and capacities of 1X STM at K62,500, 622 MbPS at K188,813, 2.5G at K452,072 and 10G at K1,186,103.34.
He stated that in the case of Infratel, their requested routes included Sesheke-Solwezi; Lusaka-Chipata; Lusaka-Kasama; Lusaka-Mansa; Lusaka-Kariba and Lusaka-Nakonde, and that the monthly charges for six routes amounted to K7.2 million per month if dark fibre as leased out, and the yearly fee was K86.4 million against K14.4 million proposed for Infratel.
“This cost did not include future expansions, but had proposed a fixed amount to include future network expansions,” stated Dr Chitala.
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