The Kaduna Electricity Distribution Company’s (KAEDC) directors have all been fired by the Nigeria Electricity Regulatory Commission (NERC).
In accordance with the commission’s authority, NERC also removed every board director from their position.
The company owes N110 billion to Market Operator (MO) and Nigerian Bulk Electricity Trading (NBET) Plc.
This was stated in an order issued by Vice Chairman Musiliu Oseni and NERC Chairman Sanusi Garba on January 1st, 2024.
The order was identified with the number “NERC/2024/00.”
“In exercise of the powers vested in the commission by section 75 of the EA, all KAEDC directors are hereby removed from office and the board of directors stands dissolved,” the commission declared.
“In accordance with section 75 of the EA, Dr. Umar Abubakar Hashidu is hereby appointed as the administrator of KAEDC.” In the interim until the sale of the undertaking to a new core investor is finalized, the administrator will serve as the de facto chief executive officer of KAEDC and be in charge of managing the day-to-day operations of the utility.
“For governance purposes, the administrator will collaborate with a group of special directors who will serve as the board’s non-executive directors.”
The following people have been named special directors of KAEDC by NERC:
i. Alex A. Okoh – Chairman
ii. Kabiru Adamu
iii. Sharfaddeen Zubair Mohamoud
iv. John Ayodele
vi. Rahila Thomas.
NERC remembered that KAEDC had repeatedly broken the provisions of the commission’s energy distribution license as well as the EA by failing to fulfill its duties to the market.
NERC observed that despite having enough of chances to address the utility’s poor performance in meetings with the commission, KAEDC’s management, board, and stakeholders have been unable to stop the utility’s failure.
The commission remembered that on May 15, 2023, KAEDC received the required 60-day notice to show cause. The management, board, and shareholders were unable to provide written justification for why the utility’s distribution license should not be revoked within the allotted period.
NERC claims that the commission gave the KAEDC management, board, and shareholders a 30-day extension, effective July 20, 2023, to submit a written justification for their inability to do so.
According to the order, the utility was unable to meet the fundamental market requirement of offering a bank guarantee in favor of NBET in accordance with the Market Rules and extant orders. This was further confirmed by a letter dated July 31, 2023, from KAEDC’s Chief Finance Officer, confirming the extent of non-performance.
After the final 30-day extension expired, the commission met with Afriexim’s leadership, who confirmed that their transaction advisor would require 4 to 6 months to finalize the divestment process and that they were unable to provide the bank guarantees necessary to secure KAEDC’s market obligation.
“As of 1 October 2023, KAEDC owes NBET and MO over N110 billion and faces the possibility of being placed under direct receivership if the utility’s current management, board, and shareholder structure is permitted to continue in the electricity market without immediate regulatory intervention.”
