The Nigerian Electricity Regulatory Commission (NERC) has taken regulatory action against Kaduna Electricity Distribution Company (Kaduna Electric) following a protracted case of underperformance from 2015 to 2022.
NERC, in a Regulatory Order jointly signed by the commission’s chairman, Sanusi Garba, and vice chair, Musiliu Oseni, appointed a new management for the company after removing all its directors and dissolving its board.
In the order dated January 1, 2024, and made available to journalists on Monday, NERC appointed Dr. Umar Abubakar Hashidu as the administrator of Kaduna Electric further to Section 75 of the Electricity Act (2023).
The commission also announced the director-general of the Bureau of Public Enterprises (BPE), Alex A. Okoh, as chairman, while Kabir Adamu; Sharfuddeen Zubair Mahmoud; John Ayodele and Rahila Thomas as special directors for the DisCo.
According to NERC, Kaduna Electric is currently experiencing severe liquidity challenges which has put its commercial viability and continuation as a market participant in doubt.
The Commission also noted that KAEDC’s management team has been unable to develop and present a clear pathway towards capital injection, operational efficiency, and sustainability despite the various regulatory initiatives of the commission and other financial interventions of the government.
“Over the period 12 months covering January – December 2022, KAEDC accrued a total liability N51.93 billion to the Nigerian Bulk Electricity Trader (NBET) and the Market Operator (MO). This is exclusive of the sum of N41.49 billion historical outstanding debts for 2015-2021 owed to NBET,” it stated.
NERC said it conducted a detailed review of the performance of Kaduna Electric in January 2023, for the period January to December 2022 confirming that the company only achieved a combined average of 13.85 per cent of its minimum payment obligation to NBET and MO and recorded an average monthly market shortfall (underpayment) of N4.33 billion.
The Commission further noted that the evaluated level of underperformance indicates that the company has been unable to recover the additional liquidity required by KAEDC to optimally function as a utility as provided in its approved revenue requirement.
“Based on the Commission’s approved revenue requirement for KAEDC, the utility under-recovered its revenues to the tune of N88.75 billion being the sum of its market shortfall, capital investment allowance N25.33 billion and allowed operating expense N11.46 billion,” NERC added.
According to NERC, the newly appointed administrator, Dr. Umar Abubakar Hashidu, 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.
Also, “the administrator shall work with a team of special directors that shall constitute non-executive directors of the board for governance purposes,” NERC stated.
-Advertisement-
Grab our latest Magazine, "Ayodele Akintunde, SAN: Legal Titan Celebrates and Reflects on His Life Journey.". Get your order fast and stress free.
For more details about Newswire Law&Events Magazine, kindly reach out to us on 08039218044, 09070309355. Email: newswiremagazine@yahoo.co.uk. You will be glad you did
