July 21, 2024
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Nigeria Seeks Sale of Kaduna Electric amidst $130 Million Debt Woes

Nigeria’s electricity regulator has initiated the sale of Kaduna Electricity Distribution Plc (Kaduna Electric), the sixth-largest power distribution utility in the country, due to a debt exceeding $130 million, Reuters reports.

This decision, announced on Monday by the Nigerian Electricity Regulatory Commission (NERC), comes less than two years after lenders took over the company in an attempt to revitalize its financial standing.

Despite being Africa’s largest economy, Nigeria’s 11 power distribution companies are grappling with profitability challenges stemming from a lack of capital and sub-economic tariffs imposed by the NERC.

Kaduna Electric, one of the 18 successor companies established following the 2013 privatization of the defunct Power Holding Company of Nigeria, provides electricity services in four northern states. The utility currently owes 110 billion naira ($130 million) to entities including the Nigerian Bulk Electricity Trader and power generation firms, as indicated in NERC’s notice on Monday.

Considering Kaduna Electric a ‘failing licensee,’ NERC is utilizing a law passed last year to dissolve its board. The utility had been taken over by African Export-Import Bank (Afreximbank) and local lender Fidelity Bank in July 2022.

However, efforts to improve its financial performance have proven challenging. The Nigerian government, through its Bureau of Public Enterprises, also owns a 40% stake in Kaduna Electric.

To facilitate the sale process, NERC has appointed an administrator and special directors to manage Kaduna Electric temporarily and oversee the auction of its assets to the highest bidder.

Nigeria, with a population exceeding 200 million people, faces electricity challenges as it produces only a fraction of its installed power generation capacity of 12,500 megawatts. This shortfall leaves millions of households and businesses reliant on private generators for their electricity needs.

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