…Appoints Administrator
The Nigerian Electricity Regulatory Commission (NERC), has removed all the Directors of Kaduna Electricity Distribution plc and dissolved its Board over its failure to meet its financial obligations to the electricity market.
NERC disclosed that as of 1 October 2023, KAEDC owed the Nigerian Bulk Electricity Trading (NBET) Plc, and Market Operator over N110 billion.
Justifying its decision, the Commission noted that the company stands at risk of direct receivership if the Utility’s continued participation in the electricity market as presently constituted at the management, board, and shareholder level is allowed to continue without urgent regulatory intervention.
As a result, it said, “all directors of KAEDC are hereby removed from office and the board of directors stands dissolved in the exercise of powers vested in the Commission by section 75 of the Electricity Act (EA)”.
In an order dated 1st of January signed by the Chairman, Sanusi Garba and Vice
Chairman, Musiliu Oseni, the Commission appointed Dr. Umar Abubakar Hashidu as administrator and de facto chief executive officer of KAEDC, responsible for the management of the day-to-day affairs of the Utility pending the finalisation of the sale of the undertaking to a new core investor.
NERC said, the administrator shall work with a team of special directors that shall constitute nonexecutive directors of the board for governance purposes.
It, therefore, appointed Alex A. Okoh as Chairman ii. Kabir Adamu iii. Sharfuddeen Zubair Mahmoud iv. John Ayodele Rahila Thomas as special directors for KAEDC.
It said, the executive management team that shall work with the Administrator shall be constituted by the Commission and announced in due course.
“The Commission shall administer the sale of the undertaking in accordance with the provisions of the EA on the basis of the highest and best price offered for the undertaking”, the Commission said.
Why The Decision?
The Commission notes that KAEDC has consistently failed to meet its obligations to the market in contravention of the EA and the terms and conditions of its electricity distribution licence issued by the Commission.
The management, board, and shareholders of KAEDC have been granted ample opportunities to address the utility’s failing performance at meetings with the Commission; and they have been unable to cure the Utility’s failure.
It said, KAEDC was issued the statutory 60-day notice to show cause on 15 May 2023, and the management, board, and shareholders Were unable to show cause in writing within the specified timeframe as to why the Utility’s distribution licence should not be canceled.
The Commission granted a 30-day extension, with effect from 20 July 2023, to the management, board, and shareholders of KAEDC to provide justifiable cause in writing and they have been unable to do so.
It said, the extent of non-performance was further reiterated by a letter dated 31 July 2023 from KAEDC’s Chief Finance Officer, where he confirmed unequivocally that the Utility was not in a position to comply with the basic market requirement of providing a bank guarantee in favour of NBET in compliance with the Market Rules and subsisting orders.
The Commission met with Afrexim’s leadership following the expiration of the final 30-day extension and they confirmed that their transaction advisor would need 4 – 6 months to finalise the divestment process and that they could not provide the bank guarantees required to secure KAEDC’s market obligation.
“As of 1 October 2023, KAEDC owes NBET and MO over NGNI10billion and stands at risk of direct receivership if the Utility’s continued participation in the electricity market as presently constituted at the management, board, and shareholder level is allowed to continue without urgent regulatory intervention.
“KAEDC has fulfilled the requirements for the invocation: of the Commission’s powers in failing licensees with the satisfaction of sections 75(3)(a)(b) and (d) of the EA”, the commission said.
