The Nigerian Electricity Regulatory Commission(NERC), and the Bureau of Public Enterprise (BPE) have both claimed responsibility for the Federal Government’s action in effecting a change in the composition of the Board of Abuja Electricity Distribution Company(AEDC).
This was made known in a joint press statement issued by two agencies and obtained by EnergyDay .
KANN Utility Company(KANN) holds 60 percent of majority share in AEDC, the licence utility firm that serves end-users in Kogi, Nassarawa, Niger and FCT. The Management of KANN has been involved in several crises allegedly over its inability to meet its obligations with NERC, BPE, and other stakeholders including acquisition loan it obtained from UBA in 2013 during the privatisation period of the power sector.
The statement jointly signed by Sanusi Garba, Chairman, NERC and Alex Okoh, Director General BPE, revealed that the recent change in the composition of the Board of AEDC was as a result of ongoing dispute among competing factors of AEDC’s majority shareholders and investor, especially, KANN Utility Company(KANN).
The statement noted that the dispute eventually spilled over to a dispute with the lender that provided the acquisition loan to KANN for the acquisition of the majority share during the privatisation exercise in 2013, over KANN’s inability to service its debt to the bank.
It said, “During the course of the intractable crisis, AEDC not only struggled to meet its obligation to the market under the terms and condition of its licence but was also unable to meet its obligation to key stakeholders in the organisation including staff culminating in the industrial action by members of the Nigeria Union of Electricity Employee(NUEE).
“Eventually, this resulted in a total service disruption on 6th of December 2021 for over 14 hours in AEDC network areas. The provision of electricity supply in AEDC’s network area was only restored after the intervention of the Minister of Power, NERC and BPE following an agreement with the Union on the terms for suspension of the industrial action on Dec, 6, 2021.
The NERC and BPE revealed that the fact and circumstances leading to the change in the composition of the Board of Abuja Electricity was misrepresented by the media.
NERC and BPE further said, “There has been ongoing dispute among competing factors of AEDC’s majority shareholders and investor. i.e. KANN Utility Company(KANN). This dispute eventually spilled over to UBA Plc (the lender) that released the acquisition loan to KANN for the acquisition of the majority share during the privatisation exercise in 2013, over its inability to service its debt.
“Arising from KANN’s inability to service its acquisition loans and the ensuring dispute over the servicing of loan from the lender exercised its right by appointing a Receiver/Manager over KANN.
“Stakeholders including NERC, CBN AND BPE had on several occasions worked to broker an amicable resolution between the contending parties .
“The protracted resolution of the dispute exacerbated the state of affairs at AEDC resulting in an industrial action and a total blackout in the service area for over 14 hours.
“It then became apparent that decisive steps were required to address the matter and BPE agreed with the lender’s request to exercise its power as Receiver/Manager over KANN by exercising it power over 60 percent equity in AEDC as a means to recovering the acquisition loan granted by the bank,” the statement said.
NERC however noted that contrary to report in the media, the action to appoint an interim team to manage AEDC was not done on the basis of a directive from the FG, but on the basis of legal processes arising from failure of core investor in AEDC to meet its obligation to a lender.
The Commission said the Receiver/Manager has agreed to the appointment of an interim management team in conjunction with BPE as part of measures designed to address business failure event and ensure continuity of service to end-use customers in the service area.
While restating the FG’s commitment to the ongoing initiatives on the recovery of the electricity sector, the Commission charged private investors to remain cognisant of their fiduciary responsibilities to the stakeholders especially regulated utilities, advising them not act in a manner that jeopardise public interest.