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ZESCO has been awarded over US$4.9 million by the Court of Appeal in a legal dispute involving a contractor and its guarantor, Golden Lotus Insurance Company Limited.
The case, linked to a 2018 World Bank-funded project for constructing the Avondale 132/33/11kV substation and switching stations, resulted in a ruling favoring ZESCO.
ZESCO Spokesperson. Matongo Maumbi, confirmed the court’s decision in a statement issued in Lusaka on Tuesday, explaining that the contractor, Liaoning EFACEC Electrical Equipment Co JV China National Electrical Design and Research Institute, failed to fulfill its contractual obligations.
“When the contractor defaulted, 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 citing delays caused by ZESCO,” Maumbi stated.
The Court of Appeal dismissed these claims, affirming that ZESCO adhered to the bond’s requirements and acted appropriately. As a result, ZESCO will receive US$4.9 million, inclusive of interest and legal costs.
Maumbi noted that the funds would support ZESCO’s operations and offset the financial impact caused by the contractor’s breach.
“This case underscores the importance of performance bonds in holding contractors accountable and safeguarding projects from financial risks,” he added.
In a separate legal matter, ZESCO successfully defended itself against claims from five former employees who had voluntarily exited the company in 2013.
The employees, who had already received redundancy packages, sought additional payments, including three months’ notice pay and continued salaries until their benefits were fully settled.
“The Court of Appeal ruled that the employees were entitled to three months’ notice pay as the redundancy conditions at the time were not applicable to their cases,” Maumbi explained.
However, the court rejected their demand for continued salaries, clarifying that payroll retention applies only when employers fail to pay benefits at the time of redundancy, not for later disputes.
The judgment reportedly saved ZESCO over K3 million in unnecessary payments since 2013.
“It also highlighted the importance of clear and fair redundancy processes and provided guidelines for handling similar cases in the future,” Maumbi stated.
He emphasized that these legal victories reflect ZESCO’s commitment to safeguarding public resources and ensuring accountability in its operations.
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