NERC Goes After Kaduna Disco, Threatens To Shutdown Firm Over N93.41 billion Debt

The Nigerian Electricity Regulatory Commission (NERC) has issued a notice to Kaduna Electricity Distribution Company (KAEDCO), threatening to cancel the firm’s licence.

NERC said it has given the Kaduna Disco 60 days to settle its N93.41 billion debt to Nigerian Bulk Electricity Trading Plc (NBET) and the market operator (MO).

According to the NERC, N41.49 billion out of the debt was accumulated from 2015 to 2021, and the next year, KAEDCO added N51.93 billion to its existing debt to NBET and MO. 

The market regulator disclosed that Kaduna Disco is having severe liquidity challenges and doesn’t have a clear plan to raise capital to meet the financial obligations that accompany its operational licence. 

NERC said KAEDCO’s failure to remit required funds to NBET and MO breaches the provisions of the Electric Power Sector Reform Act (EPSRA) and the terms and conditions of the licence for electricity distribution.

In the notice, NERC said: “The commission considers KAEDCO’s actions to be manifest and flagrant breaches of EPSRA and the terms and conditions of its electricity distribution licence; and therefore, requires KAEDCO to show cause in writing within 60 days from the date of receipt of this notice as to why the electricity distribution licence should not be cancelled in accordance with section 74 of EPSRA.” 

The regulatory body also stated that: “Based on the commission’s approved revenue requirement for KAEDCO, the utility under-collected 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). 

“KAEDCO is currently experiencing severe liquidity challenges and its commercial viability and continuation as a market participant is in doubt. 

“KAEDCO’s management team has not been able 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 of 12 months covering January to December 2022, KAEDCO accrued a total liability to the tune of N51.93 billion to NBET and MO.  

“This is exclusive of the sum of N41.49 billion historical outstanding debts for the 2015-2021 owed to the NBET and MO. 

“The commission has afforded KAEDCO’s management team several opportunities to develop and present a clear pathway toward recapitalisation and improvement of operational efficiency, and sustainability of the utility, and they have been unable to present a credible plan that would yield the desired results.”