The Nigerian Electricity Regulatory Commission (NERC) has made a significant move by dissolving the Board of Directors of the Kaduna Electricity Distribution Company (KAEDCO) due to its failure to fulfil financial obligations to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator. This action is in violation of the Electricity Act 2023.
According to the statement signed by NERC Chairman Sabusi Garba, the dissolution is effective January 1, 2024, and will remain in force until amended or revoked by subsequent orders issued by the Nigerian Electricity Regulatory Commission.
The NERC justified its decision by stating that KAEDCO’s core investors neglected multiple opportunities to provide a bank guarantee, a requirement that could have prevented this regulatory intervention.
“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,” the statement noted.
Despite multiple warnings and opportunities given to KAEDCO’s management, board, and shareholders to rectify the utility’s failing performance, they were unable to do so. The Commission issued a statutory 60-day notice on May 15, 2023, followed by a 30-day extension from July 20, 2023, for KAEDCO to show cause in writing, but no justifiable cause was provided.
The NERC highlighted that as of October 1, 2023, KAEDCO owed NBET and the market operator over NGN110 billion, putting the utility at risk of direct receivership if immediate regulatory intervention is not taken.
In response to this, the NERC has removed all directors of KAEDCO from office and dissolved the Board of Directors, invoking its powers under Section 75 of the Electricity Act. Dr. Umar Abubakar-Hashidu has been appointed as the administrator of KAEDCO, taking on the role of Chief Executive Officer. He will be responsible for managing the utility until the finalisation of its sale to a new core investor.
The administrator will work with non-executive directors constituted by NERC, with Alex Okoh as chairman, until an executive management team is appointed. This decisive action aims to address the financial irregularities and steer KAEDCO towards a more stable and compliant future.