By ABAH ADAH, Abuja
The Nigerian Electricity Regulatory Commission (NERC) says it has dissolved the board of directors, BoD, of Kaduna Electricity Distribution Company, KAEDCO for failing to meet its financial obligations to the Nigerian Bulk Electricity Trading Plc, NBET, and the Market Operator, OP, in contravention of the Electricity Act (EA) 2023.
In what it tagged as Order of Regulatory Intervention in Kaduna Electricity Distribution Plc, made available to the media on Monday, the Nigerian electricity umpire said the Order takes effect from 1 January, 2024 and remains in force until amended or revoked by subsequent Orders issued by it.
According to NERC, it had to act after KAEDCO core investors failed to take advantage of all entreaties to provide bank guarantee.
NERC said, “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.
“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 cancelled.
“The Commission granted a 30-day extension, with effect from 20 July 2023, to the management, board and shareholders of KAEDC to provide iustifiable cause in writing and they have been unable to do so.
“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 at 1 October 2023, KAEDC owes NBET and MO over NGN110 billion and stands in the risk of direct receivership if the Utility’s continued participation in the electricity market as presently constituted at 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 thereby orders as follows :-
A. 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 EA.
B. Dr Umar Abubakar Hashidu is hereby appointed as the administrator of KAEDC further to section 75 of the EA. He shall be the de facto chief executive officer of KAEDC and shall be 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.”
According to the order, the administrator is to work with non-executive directors constituted by NERC with Alex Okoh as Chairman, pending when an executive management will be constituted.
The SUMMIT POST reports that the new head over KAEDCO, Dr Umar Abubakar Hashidu, was inaugurated by NERC in Kaduna on Monday morning.
A statement issued by the Head of Corporate Communication, Abdulazeez Abdullahi, said a brief handover ceremony presided over by Mr Dafe Okpaneye, the NERC Commissioner for Legal Licensing and Compliance, was held at the company’s corporate headquarters in Kaduna.