By ZR Reporter
Court of Appeal has awarded ZESCO Limited US$4.9 million in contract dispute.
This is in a case involving Liaoning EFACEC Electrical Equipment Co JV China
National Electrical Design and Research Institute and their guarantor, Golden Lotus Insurance
Company Limited.
ZESCO Limited Spokesperson Matongo Maumbi disclosed that the dispute arose from a 2018 project for the construction of the Avondale 132/33/11kV substation and switching stations, funded by the World Bank.
Mr Maumbi said when the contractor failed to meet its obligations under the contract, ZESCO demanded payment under a performance bond issued by the guarantor.
“Both parties disputed the demand, claiming ZESCO had not followed the bond’s terms and that the contractor could not deliver because of delays caused by ZESCO,” he said.
“The Court of Appeal dismissed these claims, confirming that ZESCO had followed the required process and acted within the terms of the performance bond. As a result, ZESCO was awarded USD4.9 million, which will be used to support the corporation’s operations and reduce the financial impact of the contractor’s breach.”
He said the case serves as a reminder of the importance of performance bonds in holding contractors accountable and protecting projects from financial losses.
He also said that there is K3 million that has been saved in a different “redundancy case.”
Mr Maumbi said ZESCO “successfully” defended itself against claims from five former employees who had voluntarily left the company in 2013.
He added that the employees had already received redundancy packages but later demanded additional payments, including three months’ notice
pay and continued salaries until their benefits were fully paid.
“The Court of Appeal ruled that the employees were entitled to three months’ notice pay because the redundancy conditions used at the time were not applicable to their cases,” he said.
“However, the court
rejected their claim for continued salaries, clarifying that payroll retention only applies if an employer cannot pay benefits at the time of redundancy—not for disputes that arise later. This judgment saved ZESCO over K3 million in salaries and costs that could have been paid unnecessarily since 2013 to date. It also highlighted the importance of clear and fair redundancy processes and provided guidelines for handling such cases in the future.”
Meanwhile, Mr Maumbi said the court victories reflect ZESCO’s dedication to prudent management of resources and the resolve to uphold transparency and fairness in all operations.
“We remain committed to ensuring that public funds are protected, contracts are enforced, and employees’ rights are respected within the framework of the law,” he said.
“We commend our Legal Department for their hard work and professionalism in securing these outcomes, which strengthen ZESCO’s ability to deliver reliable energy services to the nation.”
©️Zambia Reports 2024