NERC moves to cancel Kaduna DisCo licence over N51bn debt

THE Nigerian Electricity Regulatory Commission (NERC) has notified the Kaduna Electricity Distribution Company (KAEDCO) of its intention to cancel its licence after 60 days over a N51 billion debt.

In a published notice tagged NERC/LC/023 dated May 15, 2023, and signed by its Commissioner, Legal, Licencing and Compliance, Dafe Akpeneye, the commission informed, “Take note that KAEDCO is hereby given 60 days from the date of this notice to show cause why the electricity distribution licence should not be cancelled in accordance with section 74 of EPSRA.”

Data from NERC’s performance review for 2022 showed KAEDCO only paid 13.85 per cent of its minimum payment obligation to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator (MO) with a N4.33 billion average monthly underpayment, reaching about N51.96 billion.

It also under-collected its revenues to the tune of N88.75 billion as market shortfall, capital investment allowance (N25.33 billion) and allowed operating expenses (N11.46 billion) during the period.

NERC highlighted several regulatory interventions for the DisCo, noting that after KAEDC failed to provide a credible plan for the financial sustainability of the utility, it issued a notice of imminent regulatory intervention dated March 23, 2023, to the core investors – Africa Export-Import Bank, Fidelity Bank Plc and Bureau of Public Enterprises (BPE) –  with 14 days to present their plan

KAEDC’s investors in April sought more time from NERC without commitment to pay for energy remittance defaults. NERC then met with the investors on April 14, 2023, to discuss their final plan proposals and how to reduce their debts by N1 billion in one year, and a N2 billion stabilisation loan to cut the DisCo’s N4.3 billion shortfall by N250 million immediately, among others.

The KAEDC then submitted the proposed plan by April 17, but NERC said it reviewed the plan and considered it as failing to meet the obligations.

It subsequently moved to cancel the DisCo’s licence




     

     

    In a related development, the Transmission Company of Nigeria (TCN) said it would deepen market discipline and enforce market compliance, resulting in the disconnection of several defaulters from the national grid.

    The TCN arm of the Market Operator (MO) expressed concerns over defaults in payment of the non-cost reflective tariff by Market Participants, stating that this had resulted in funding deficit and liquidity problems for the company.

    According to the General Manager, Market Operator of TCN, Edmund Eje, there would be a revenue shortfall if distribution companies and the privatised electricity market did not enforce market compliance rules by ensuring payment of cost-reflective tariffs.

    Eje added that the TCN, as a regulator, needed to enforce rules of market discipline in order to sustain itself post-privatisation without relying on government subsidies.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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