The Nigerian Government has cleared the air on the circumstances that led to the change in the composition of the board of Abuja Electricity Distribution Company, AEDC that serves end-use customers in Kogi, Nasarawa, Niger states and Federal Capital Territory, Abuja.
The Nigerian Electricity Regulatory Commission, NERC and Bureau of Public Enterprises, BPE in a joint press statement said there has been an ongoing dispute amongst competing factions of AEDC’s majority shareholders/core investor, such as KAAN Utility Company Limited.
This dispute eventually spilled over to a disagreement with the lender that provided the acquisition loan to KANN for the acquisition of majority shares during the privatisation in 2013, over KANN’s inability to service its debt with the bank.
According to the statement, “during the course of the crisis, AEDC struggled to meet its obligation to the market under the terms and condition of its licence and was also unable to meet its obligation to key stakeholders in the organization including staff culminating in the industrial action by members of the Nigerian Union of Electricity Employees”.
“Eventually this resulted in a total service disruption on 6th December for over 14 hours in AEDC’s network area and later restored through the intervention of the Minister of Power, Babangida Aliyu, NERC and BPE following an agreement with the union on the terms for the suspension of the industrial action”.
The statement drew the attention of the general public to note that arising from KANN’s inability to service its acquisition loan and the ensuing dispute over the servicing of the loan from UBA Plc, the lender exercised its rights by appointing a Receiver/Manager over KANN.
Stakeholders including NERC, Central Bank of Nigeria and BPE had several times 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 powers as Receiver/Manager over KANN Dy exercising its powers over the 50% equity in AEDC as a means to recovering the acquisition loan granted by the Bank” the statement read in part.
The statement noted that the action to appoint an interim team to manage AEDC was not done based on a directive from the Federal Government as being falsely reported in the press but based on legal processes arising from the failure of the core investor in AEDC to meet its obligations to a lender.
“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 events and ensure continuity of service to end-user customers in the service area.
“The Federal Government remains committed to the ongoing initiatives on the recovery of the electricity sector but private investors should remain cognizant of their fiduciary responsibilities to their stakeholders’ especially in regulated utilities and should not act in a manner that jeopardizes public interest.
“NERC and BPE shall continue to work constructively with key stakeholders in the power sector to ensure continued growth and service improvement under the reforms being embarked upon by the Federal Government for the socio-economic growth of our great nation”.
Government clears air on AEDC’s sacked board