The Nigerian Electricity Regulatory Commission (NERC) has taken decisive action by dissolving the Board of Directors of the Kaduna Electricity Distribution Company (KAEDCO) due to the company’s failure to fulfill financial obligations to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator. The dissolution, effective from January 1, 2024, is in line with the Electricity Act 2023 and will remain in force until further review or amendment by NERC.
NERC Chairman, Sabusi Garba, highlighted that this action followed the persistent inability of KAEDCO’s core investors to provide a required bank guarantee, despite numerous attempts and extensions granted by the Commission.
According to NERC, KAEDCO’s consistent failure to meet its market obligations, contravening both the Electricity Act and the terms of its distribution license, led to the dissolution. The management, board, and shareholders were given multiple opportunities to address the utility’s shortcomings, including a statutory 60-day notice issued on May 15, 2023, and subsequent extensions. However, KAEDCO was unable to demonstrate satisfactory cause in writing within the stipulated time frames.
The situation was further compounded by KAEDCO’s inability to comply with basic market requirements, such as providing a bank guarantee in favor of NBET, a vital stipulation under Market Rules.
The Commission engaged Afreximbank’s leadership, as KAEDCO’s transaction advisor, who indicated a 4 – 6 months’ timeline required to finalize the divestment process, further complicating the provision of the necessary bank guarantees.
As of October 1, 2023, KAEDCO’s outstanding debt to NBET and MO exceeded NGN110 billion, posing a direct risk of receivership if the utility’s continued participation in the electricity market remained unchanged at the management, board, and shareholders’ level.
In response, NERC invoked its powers under section 75(3)(a)(b) and (d) of the Electricity Act, leading to the removal of all KAEDCO Directors and the dissolution of its Board. Dr. Umar Abubakar-Hashidu has been appointed as the Administrator of KAEDCO under section 75 of the Electricity Act and is designated the new Chief Executive Officer.
The Administrator will manage KAEDCO, overseeing its operations until the completion of the company’s sale to a new core investor. NERC has also constituted a non-Executive Directors team, chaired by Alex Okoh, pending the establishment of an Executive management team.
Dr. Umar Abubakar-Hashidu has assumed the role of the new head of KAEDCO following Mr. Yusuf Usman-Yahaya’s departure. During a handover ceremony presided over by Mr. Dafe Okpaneye, NERC Commissioner for Legal Licensing and Compliance, the former Managing Director was commended for his contributions, with Dr. Hashidu urged to harness talent and resources to elevate KAEDCO to greater heights. Dr. Hashidu, in his address to the Executive Management Committee and staff, urged everyone to strive for excellence, expressing confidence in the management’s ability to lead the company toward progress.
