The Zambia Electricity Supply Corporation Limited (ZESCO) has taken legal action against Savenda General Insurance Limited, seeking K1.3 million in the Lusaka High Court. This lawsuit culminates from an alleged breach of contractual obligations related to a tender for cable fault locators and power transformer test systems.
Court documents reveal that Zesco had requested bidders to provide a Bid Security from a financial institution or insurer as part of the tender process. Following this, the utility awarded the contract to Tronex Contractors and Suppliers Limited in August 2024. This contract was partly based on a Performance Guarantee issued by Savenda in October 2024, which pledged to pay Zesco up to K1.3 million if the contractor failed to meet their obligations.
The Performance Guarantee was set to expire at the end of March 2025, requiring any payment demands to be received by Savenda before this date. Zesco filed that Tronex Contractors only delivered half of the contracted goods by the November 2024 contract expiry date, constituting a breach.
“By letter of demand dated March 20 this year, the plaintiff made a claim upon the defendant for payment under the performance bond of the sum of K1,387,360 due to the contractors breach.”
“The letter required the defendant to honour this claim within seven days from the receipt of demand, which demand was to be honoured by March 17, 2025.”
Therefore, the utility submitted a demand for payment to Savenda in March 2025, requesting the guaranteed sum.
Zesco argued that Savenda’s refusal to honour this demand was unjustified, asserting that the contractor’s delayed intentions to deliver the goods do not negate Savenda’s responsibility under the performance bond.
Furthermore, Zesco claimed the goods have still not been delivered. As a result of Savenda’s alleged failure to pay, Zesco stated that it has incurred losses and inconvenience and is seeking over K1.3 million in compensation.
