In a surprising move, the Nigerian Electricity Regulatory Commission (NERC) has recently announced the sale of the sixth largest power distribution utility. Despite being burdened with a staggering debt of ₦110 billion ($130 million), this decision comes as a consequence of the company’s unsuccessful revival attempts by its previous lenders within a short span of two years. Nigeria is grappling with a challenging situation, as it currently houses 11 power distribution companies that are finding it hard to maintain profitability. The primary causes for this struggle are the scarcity of capital and the impositions of sub-economic tariffs, which have been enforced by the Nigerian Electricity Regulatory Commission (NERC).
Notably, Kaduna Electric emerged as an outcome of the 2013 Privatization of the now dissolved Power Holding Company of Nigeria, along with 17 other entities. It operates in the northern region of Nigeria, catering to the electricity needs of residents in four specific states. According to a notice published by NERC on January 8, 2024, the Nigerian Bulk Electricity Trader along with numerous Power Generation firms are among the entities that the utility owes a staggering ₦110bn. NERC has been granted the authority to dissolve the board of the company as it is now regarded as a ‘failing licensee’, according to the regulator. This decision is based on a recently passed law.
Nigerian government also holds a 40% stake in Kaduna Electric.
Furthermore, in July 2022, Kaduna Electric experienced a change in ownership when the African Export-Import Bank (Afreximbank) and local lender Fidelity Bank stepped in. However, their efforts to enhance the company’s financial performance have been met with challenges. It is worth noting that the Nigerian government, via its Bureau of Public Enterprises, also holds a 40% stake in Kaduna Electric. NERC announced its decision to entrust the temporary management of Kaduna Electric to an administrator alongside specialized directors, whose main task will involve facilitating the sale of the company’s assets to the most competitive buyer.
According to section 75 of the EA, it has been declared that Dr. Umar Abubakar Hashidu shall now assume the role of the administrator for the Kaduna Electricity Distribution Company (KAEDC). The person holding the administrative role shall serve as the effective head of KAEDC and have the duty of overseeing the operational aspects of the utility on a daily basis until the completion of the sale of the company to a new primary investor. The governance of KAEDC entails the collaboration between an administrator and a group of esteemed non-executive directors, known as the special directors.
A concise transfer of responsibilities event had taken place.
Also, in this regard, the individuals designated as special directors for KAEDC are Alex A. Okoh, who serves as the Chairman, Kabir Adamu, Sharfuddeen Zubair Mahmoud, John Ayodele, and Rahila Thomas. The commission announced that it would establish an executive management team to collaborate with the administrator. The composition of this team will be revealed at a later time. As per the provisions stated in the EA, the Commission will be responsible for managing the sale of the undertaking with utmost care, ensuring that it is executed in a fair and transparent manner.
The primary criterion for selecting the buyer will be the highest and most optimal price offered for the undertaking. In the meantime, Kaduna Electric welcomed Dr. Umar Abubakar Hashidu as its new Chief Executive Officer, marking the beginning of his official duties. In an announcement delivered by Abdulazeez Abdullahi, the Head of Corporate Communication, it was revealed that a concise transfer of responsibilities event had taken place. This ceremony was overseen by Dafe Akpeneye, the NERC’s Commissioner for Legal Licensing and Compliance.
Hashidu should effectively utilize the skills and assets at his disposal.
Additionally, it occurred at the corporate headquarters of the organization in Kaduna. During the event, which was trailed by a brief engagement with the employees, Akpeneye expressed his gratitude to the previous Managing Director for the remarkable efforts he dedicated over the past year and a half to propel the company’s progress. He encouraged Dr. Hashidu to effectively utilize the abundant skills and assets at his disposal in order to elevate Kaduna Electric to unprecedented levels of success.