Kaduna Disco risks losing licence over N51.93bn debt

Kaduna Electricity Distribution Company (KAEDCO) risk losing its operational licence due to the company’s N51.93 billion debt.

KAEDCO received a notification from the Nigerian Electricity Regulatory Commission (NERC) on Monday, informing the company of its intention to cancel its licence.

According to reports on Tuesday, KAEDCO has accrued a debt of N41.49 billion between 2015 to 2021, owed to Nigerian Bulk Electricity Trading Plc (NBET) and the market operator (MO).

In 2022, the Kaduna Disco also accrued a total liability to the tune of N51.93 billion to NBET and MO, totaling N93.41 billion debt from 2015 to 2022.

NERC said it had reasonable cause to believe that KAEDCO had breached the provisions of the Electric Power Sector Reform Act (EPSRA) and the terms and conditions of the electricity distribution licence.

The NERC gave the disco 60 days to resolve its debt issue or face termination of its license to operate. This comes weeks after Kaduna Disco was disconnected from the national grid by the Transmission Company of Nigeria (TCN) before it was later reconnected.

READ ALSO:Blackout looms as Nigerian govt disconnects power companies from grid

The notice reads: “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.”

NERC expatiates further 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.”

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