The Nigerian Electricity Regulatory Commission (NERC) has put up for sale the sixth largest power distribution utility over a N110billin ($130 million debt), less than two years after the lenders who took over the company failed to turn it around and make it profitable.

Nigeria, has 11 power distribution companies but it is struggling to remain profitable because of lack of capital and sub-economic tariffs imposed by the Nigerian Electricity Regulatory Commission (NERC).



Kaduna Electricity Distribution Plc (Kaduna Electric) is one of 18 successor companies created following the privatisation of the defunct Power Holding Company of Nigeria in 2013 and sells electricity in four northern states.

The utility owes N110bn, NERC said in a notice on Monday, to companies including the Nigerian Bulk Electricity Trader and power generation firms.


The regulator said it now considered the company a ‘failing licensee’, allowing NERC to dissolve its board using a law passed last year.

Kaduna Electric was taken over by African Export-Import Bank (Afreximbank) and local lender Fidelity Bank in July 2022 but they have struggled to improve its financial performance. The Nigerian government through its Bureau of Public Enterprises also owns a 40% stake.

NERC said it had appointed an administrator and special directors to manage Kaduna Electric in the interim and sell its assets to the highest bidder.


It stated that Dr. Umar Abubakar Hashidu is hereby appointed as the administrator of KAEDC in furtherance 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. The following are hereby appointed as special directors for KAEDC; Alex A. Okoh, Chairman, Kabir Adamu, Sharfuddeen Zubair Mahmoud, John Ayodele and Rahila Thomas.”

It added that the executive management team that shall work with the administrator would be constituted by the commission and announced in due course.

“The Commission shall administer the sale of the undertaking in accordance with the provisions of the EA on the basis of the highest and best price offered for the undertaking.”

Meanwhile, Dr. Umar Abubakar Hashidu yesterday resumed office as the Chief Executive Officer of Kaduna Electric.

A statement issued by the Head of Corporate Communication, Abdulazeez Abdullahi, this morning, said a brief handover ceremony presided over by the NERC’s Commissioner for Legal Licensing and Compliance, Dafe Okpaneye, at the company’s corporate headquarters in Kaduna.

At the ceremony, which was followed by a short interaction with staff, Okpaneye thanked the former MD for the work he had put in in the past 18 months to move the company forward. He charged Dr. Hashidu to harness the talent and resources available to him to take Kaduna Electric to greater heights.

https://dailytrust.com/fg-to-sell-kaduna-electric-over-n110bn-debt/

Imagine

110billion debt

Okay

This is what happens when government controls prices and pays and subsidy. Debt results

Says so in the article. Sub economic tarrifs. That means that government forces the discos to charge prices below the production cost, which in turn forces them to operate at a loss.

And then they find it difficult to pay loans , hence the lender taking over.

But because of sub economic tarrifs, the companies cannot make a profit. So despite the new management, the companies lose money


Moral of the story is electricity is not cheap. It has to be priced appropriately to make a profit.

Abokii no dey pay nepa bill, were him see work to pay bills, invest in that region at ur own risk☹️

The irony is that, over there, the monthly electricity bill is strange to most of the locals, almost non existent, they believe it is the duty of government to pay for their basic utilities, and this is a region that enjoys nearly 24 hours power supply everyday; whereas, most households in the southern region pay between 5k to 10k monthly for electricity bill and most of the places don't enjoy up to 5 hours of electricity supply everyday. Nigeria is such an irony.

H

one of the importance of taking over a company like this is to rigorously drive revenue, the company didn't do well. When Port Harcourt Electricity Distribution Plc started, people hated then cuz they made sure all efforts was thrown at generating revenue and protecting it, PHED stands out as one of the best Electricity company in Nigeria today.

A company that generates 6billiom monthly as KEDC should be able to clear its debt in 3 years max.

I was told that the only viable discos are Eko and Ikeja. Even Abuja disco is struggling - due to the neighboring franchise states (Niger, Kogi and Nassarawa). The privatisation of PHCN was ill thought and badly implemented. The power sector is unlike telecommunications where strong competition entrenched fairer prices. The value chain for power sector is longer--the gas supply part of it is dollar dependent. Thus, it's prone to several vagaries.
The minimum wage for workers is currently a measly 30k. The average take home of Nigerian families is probably less than 50k monthly. A KWh of electricity is now at least 60 Naira. A modest house spends up to 20k per month for 15 hours of electricity. How do you expect such a family living in penury to pay the power costs?
The government needs to get a viable solution to this mess

tnerro1:
Abokii no dey pay nepa bill, were him see work to pay bills, invest in that region at ur own risk☹️

Not only aboki. All the power distribution companies are struggling to make money because they are broke due to sub economic tarrifs and poor income. North and South. People don't pay for power and even where a meter is available they bypass it.

Infact not one of the discos has broken even since 2013. Not one.

Plus GSM companies do a roaring business in aboki land. Has something to do with not being able to use a phone till you put money in it plus GSM companies being allowed to set their prices. Discos can't do either. They are forced to operate at a loss, plus some consumers just bypass the meter or refuse to pay for power because it is too 'expensive'

Namadi Sambo and co
Collecting revenues and refusing to pay debts
They should all be taken back

Will they collect #150k?







I'm being too generous

Hahaha.
Word on the street is that only Enugu distribution company,Ikeja and Abuja own are making gains.
And we know it's the same IPOB ppl who are still paying bills in Lagos and Abuja distribution companies.

Aboki no need light

Yankee101:
Namadi Sambo and co
Collecting revenues and refusing to pay debts
They should all be taken back

The article does not blame refusal to pay debts.

They cannot pay debts because thanks to sub economic tarrifs, they cannot make a profit in the first place

Then add the fact that a substantial amount of people do not pay for the power they use

Plus the disco has been in the hands of the lenders for the past 2 years. Not Namadi sambo. And because of the above they have the same issue

I know Corruption is an issue,and am not a fan of our political class, but this is a case of what happens when a company is forced by government to set prices to help the poor. Companies are not charities,they are meant to make money.

If they can't,the above results

Pio44:
Aboki no need light

But they use Telco and internet well, because GSM and ISP can set their prices and can thus afford the costs of doing business up north.

Disco cannot set its price. That is why all of them are in debt,and when last I checked, the South is not majority Hausa Fulani

treesun:



https://dailytrust.com/fg-to-sell-kaduna-electric-over-n110bn-debt/

99.9% of the money are stolen and in personal purse, yet debt have closed down and people will loose means of livelihoods.

Lol…kaedco that year…a lot of my friends left Unity bank to work there

aceman88:
The irony is that, over there, the monthly electricity is strange to most of the locals, almost non existent, they believe it is the duty of government to pay for their basic utilities, and this is a region that enjoys nearly 24 hours power supply everyday; whereas, most households in the southern region pay between 5k to 10k monthly for electricity bill and most of the places don't enjoy up to 5 hours of electricity supply everyday. Nigeria is such an irony.

Many Northern areas are also in darkness too. And many southerners do not pay for power and have the same attitude towards paying for power that the North has.

Either way, it means that the sector has not been able to make a profit, north or south

Sell the whole fvcking discos

Easiest way to solve this electricity liquidity crisis is to have a monthly tiered system whereby those who use less electricity per month pay less and those who use more pay more. In effect, heavy users will subsidize those who pay less. This achieves many things:

1. Subsidy moves from government to those who use a lot of electricity.
2. people are incentivized to manage their electricity usage so they don't fall into the next higher tier.
3. The poor and vulnerable are protected
4. Liquidity and investment in the electricity system will improve.
5. Weighted average costs per kwh still far lower than generator, which can be as much as N500/kwh

110 Billion Naira accumulated in debt...meanwhile, British American Tobacco just paid 110 billion Naira fine within one week's notice.


E no clear

Here in Scotland, if you don't buy units, no light for you. Nigeria should give everyone prepaid meter and imprison those who bypass their meter. In addition govt should subsidise electricity by 50% as per poor country we are. Even fuel is being subsidized

vowiski:


slowpoke spotted

1. I don't recall abusing you

2. I don't see why you should abuse me

3. I also see that you have no points to refute my comment.

4. Stop acting like a two year old. You are an adult,behave like one. And stop disgracing your parents here. They brought you up better than this.

5 Good morning

Tinubu till 2031

History555:
Here in Scotland, if you don't buy units, no light for you. Nigeria should give everyone prepaid meter and imprison those who bypass their meter. In addition govt should subsidise electricity by 50% as per poor country we are. Even fuel is being subsidized

Government already subsidies power. Severely even.

Hence all the discos losing money

Plus,paying for a subsidy means money has to be raised for it. And with our very low tax to gdp ratio, that won't be possible

COMPAQ:
Easiest way to solve this electricity liquidity crisis is to have a monthly tiered system whereby those who use less electricity per month pay less and those who use more pay more. In effect, heavy users will subsidize those who pay less. This achieves many things:

1. Subsidy moves from government to those who use a lot of electricity.
2. people are incentivized to manage their electricity usage so they don't fall into the next higher tier.
3. The poor and vulnerable are protected
4. Liquidity and investment in the electricity system will improve.
5. Weighted average costs per kwh still far lower than generator, which can be as much as N500/kwh

The tiered system is an excellent one... but I am not sure Nigeria is ripe for it yet.

People will seek ways to bypass or tamper with meters to fall into lower tiers.

What I think needs to be done is ensure EVERYONE utilising electricity pays. When incomes rise, then you can start thinking of tiering.

See, it is an open secret that some just blatantly refuse to pay despite enjoying light. Let's get them to stay paying for it and revenues will rise.

Simply meter everyone and make your money

nairalanda1:
This is what happens when government controls prices and pays and subsidy. Debt results

Says so in the article. Sub economic tarrifs. That means that government forces the discos to charge prices below the production cost, which in turn forces them to operate at a loss.

And then they find it difficult to pay loans , hence the lender taking over.

But because of sub economic tarrifs, the companies cannot make a profit. So despite the new management, the companies lose money


Moral of the story is electricity is not cheap. It has to be priced appropriately to make a profit.

Your agenda still never change.
Do you know that Nigerians pay for blackout?
Give every customer a prepaid meter.
Is data cheap? But Nigerians are paying for internet data.