Nigeria’s electricity regulatory body has initiated the sale of the sixth largest power distribution utility, Kaduna Electricity Distribution Plc (Kaduna Electric), owing to a staggering $130 million debt.Thank you for reading this post, don't forget to subscribe!
This move comes less than two years after the company’s lenders, African Export-Import Bank (Afreximbank) and local lender Fidelity Bank, failed to reverse its financial downturn.
The privatisation of the Power Holding Company of Nigeria in 2013 birthed 18 successor companies, and Kaduna Electric, operating in four northern states, finds itself in dire straits due to a lack of capital and sub-economic tariffs imposed by the Nigerian Electricity Regulatory Commission (NERC).
Despite being taken over in July 2022, Kaduna Electric’s financial performance remains a challenge for Afreximbank and Fidelity Bank. The Nigerian government, holding a 40% stake through the Bureau of Public Enterprises, is also grappling with the utility’s struggles.
NERC, invoking a law enacted last year, has declared Kaduna Electric a ‘failing licensee,’ paving the way for the dissolution of its board.
The regulatory body has appointed an administrator and special directors to oversee the utility on an interim basis and facilitate the sale of its assets to the highest bidder.
Nigeria, Africa’s largest economy with 11 power distribution companies, faces a broader issue as these entities grapple with profitability concerns.
The country’s installed power generation capacity of 12,500 megawatts falls significantly short of meeting the demands of its over 200 million population, forcing households and businesses to heavily rely on private generators for electricity.