Following reports of mounting debt of up to ₦110 billion, equivalent to $130 million, owed to various entities, the Nigerian Electricity Regulatory Commission (NERC) has approved ASI Engineering Limited’s takeover of a 60 percent ownership position in Kaduna Electricity Company Plc (Kaduna Electric). With NERC’s approval, Kaduna Electric’s equity portion will be acquired, ushering in an era of opportunity for the revitalization and repositioning of the electricity company. The purchase of the electricity company is an important aspect of the continuous initiatives to enhance and rejuvenate the country’s power sector.
To draw investments and improve the distribution of energy, ASI intends to work with state governments and other stakeholders in the license region (Sokoto, Kebbi, Zamfara and Kaduna). Its objective is to transform Kaduna Electric to a forerunner in the distribution of electricity within the country, with an emphasis on network modernization, innovative solutions, and enhancing client satisfaction. The company aims to promote Sustainable Development and raise the standard of living for locals as well as businesses and industries with its newly appointed board and managerial team.
ASI will focus investments in infrastructure improvement.
Along with the Bureau of Public Enterprises (BPE), NERC was honoured for their contribution in facilitating the acquisition process. In accordance with the provisions of the acquisition agreement, ASI will focus investments in Infrastructure improvement, staff training and development, and community involvement projects while engaging in new projects that would benefit all parties involved in the long run. By making further investments, the firm hopes to fulfill its legal obligations, attain financial stability, and guarantee prompt payment to energy producing companies. It is expected that the new management would increase operating efficiency by adopting best practices, upgrading infrastructure, and employing innovative technologies.
After African Export-Import Bank (Afreximbank) and local lender Fidelity Bank acquired Kaduna Electric in July 2022, they encountered many obstacles in their attempts to improve the company’s financial performance. As a result, NERC dissolved KAEDC’s board of directors on the 1st of January, 2024, in accordance with its authority under the Act, since the firm is unable to pay a significant debt owed to Market Operator (MO) and Nigerian Bulk Electricity Trading Plc (NBET). This decision was made barely two years after the lenders took over the company, failing to improve the company’s profitability and financial standing.
Maintaining profitability is becoming difficult for the 11 DisCos.
Under the new ownership, NERC will remain indispensable in monitoring Kaduna Disco’s operations. The commission will guarantee that the business fulfils performance goals, abides by legal obligations, and upholds the conditions of the sale in order to safeguard the interests of customers. Nigeria has been facing numerous difficulties in the power sector, despite having the largest Economy in Africa. Maintaining profitability is becoming increasingly difficult for the 11 power Distribution Companies (DisCos) in the country as they continue to struggle due to sub-economic Tariffs levied by the NERC and capital shortfalls.
In November 2013, Northwest Power Limited-led consortium acquired a 60 percent stake in Kaduna Disco as part of its Privatization process. The remaining 40 percent was retained by the federal government. This privatization was a component of a comprehensive plan to address the longstanding inefficiencies and deteriorating infrastructure issue bedeviling the sector. However, the company was beset by serious difficulties from the start. The transition journey of Kaduna Disco from a privatized company to the ASI Engineering’s recent acquisition of a majority stake serves as a profound example of the intricate dynamics at play in the sector.
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The operation of Kaduna Disco, Nigeria’s sixth-largest power distribution company, is essential to the stability and expansion of the country’s power industry as a whole. A stable and sustainable Power Supply is essential for national endeavours as well as the local economy. Apart from Kaduna Disco, there are currently plans to sell off additional assets in the power sector. Plans to sell the federal government’s remaining 40 percent shares in various energy distribution companies and other power assets have been made public. There is also continuous effort to improve operational efficiency and draw in private investments.