The Nigeria Electricity Regulatory Commission (NERC) has taken over the Kaduna Electricity Distribution Company (KAEDC).
It declared DisCo as unable to discharge its responsibilities as a company.
The NERC dissolved the board of KAEDC and appointed replacements pending to run the firm pending when it will be sold to new investors.
The action followed the inability of the distribution company to pay N110 billion it owes the Nigerian Bulk Electricity Trading (NBET) Plc and Market Operator (MO).
NBET is the manager and administrator of the electricity pool in the electricity supply industry. MO, on the other hand, is a prominent institutional investor, a hedge fund or a group of traders working together to achieve a goal.
A statement by NERC reads: “All directors of KAEDC are hereby removed from office and the board of directors stands dissolved in exercise of powers vested in the commission by section 75 of the Electricity Act (EA).
“Dr. Umar Abubakar Hashidu is hereby appointed as the administrator of KAEDC further to section 75 of the EA.
“The administrator 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.
“The administrator shall work with a team of special directors that shall constitute non-executive directors of the board for governance purposes.”
NERC said the following are hereby appointed as special directors for KAEDC: Alex A. Okoh (chairman), Kabiru Adamu, Sharfaddeen Zubair Mohamoud, John Ayodele and Rahila Thomas.”
NERC recalled that KAEDC has consistently failed to meet its obligations to the market in contravention of the EA and the terms and conditions of the electricity distribution licence.
It also noted that the management, board and stakeholders of the firm had been granted ample opportunities to address their poor performance.
The commission also recalled that KAEDC was given till May 15 last year to show in writing why its distribution license should not be cancelled.
NERC said that as of October 1 last year, KAEDC owed NBET and MO over N110 billion and therefore stood “ the risk of direct receivership.”
The regulatory agency had in October 2019 served notices to eight DisCos of its plan to revoke their licences if they failed within two months to settle debts and address breaches of the “terms and conditions of their power purchase agreements.”