The Nigerian Electricity Regulatory Commission (NERC) has said that it will cancel the Electricity Distribution Licence (EDL) issued to Kaduna Electricity Distribution Company (KAEDCO) over the DisCo’s energy debt of over N93.42 billion, among others.
NERC, in a published notice tagged NERC/LC/023, signed by the Commissioner, Legal, Licencing and Compliance, Dafe Akpeneye, and dated May 15, 2023, gave the distribution company 60 days to repay its debt or have its operating licence revoked.
NERC said, “Take note that KAEDCO is hereby given 60 days from the date of this notice to show cause why the electricity distribution licence should not be cancelled in accordance with section 74 of EPSRA.”
The NERC performance review for 2022 showed that KAEDCO only paid 13.85 per cent of its minimum payment obligation to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator (MO) with a N4.33 billion average monthly underpayment, reaching about N51.96 billion bettween January and December 2022.
This is exclusive of the sum of N41.49 billion historical outstanding debts for the years 2015 to 2021 owed to both NBET and MO, which bring total outstanding debts to N93.41 billion.
The Commission also said it considers KAEDC’s actions to be manifest and flagrant breaches of EPSRA and the terms and conditions of its Electricity Distribution Licence, and therefore requires KAEDC 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.
The Commission said it conducted a detailed review of the current performance outlook of KAEDC for the period covering January – December 2022 confirming that KAEDC only achieved a combined average of 13.85 per cent of its minimum payment obligation to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator (“MO”) and recorded an average monthly market shortfall (underpayment) of NGN4.33billion as indicated in Table 1 4 The Commission further notes that the evaluated level of underperformance indicate that the utility has been unable to recover the additional iquidity required by KAEDC optimally function as a utility as provided in its approved revenue requirement Based c the Commission’s approved revenue requirement for KAEDC, the utility under-collecte ts revenues to the tune of NGN88.75billion being the sum of its market shortfail, capt investment allowance (NGN25.33billion) and allowed operating expense
NERC also stated that KAEDC is currently experiencing severe liquidity challenges and its commercial viability and continuation as a market participant is in doubt.
KAEDCO responds to NERC’s 60-day notice to cancel licence
The Kaduna Electricity Distribution Company (KAEDCO) has vowed to continue to provide electricity in its franchise area – Kaduna, Kebbi, Sokoto and Zamfara states despite a 60-day notice by the Nigerian Electricity Regulatory Commission (NERC) to terminate its licence.
NERC said it would cancel the Electricity Distribution Licence (EDL) issued to KAEDCO over the DisCo’s energy debt of over N93.42 billion, among others, Daily Post reports.
NERC, in a published notice tagged NERC/LC/023 signed by the Commissioner, Legal, Licencing and Compliance, Dafe Akpeneye, and dated May 15, 2023, gave the distribution company 60 days to repay its debt or have its operating licence revoked.
However, in a statement by the management of the distribution comany, it said the notice, in line with the regulatory power of the Commission, is coming on the heels of an initial engagement between the Commission and shareholders/lenders to Kaduna Electric-in-Receivership in sustaining the mutual objectives of the Federal Government for an intervention in a number of Electricity Distribution Companies including Kaduna Electric for a turnaround of the DisCos and sale of core interests to new investors.
“While the board and management have continued to work on the intervention objectives, challenges remain, and stakeholders continue to engage on addressing them,” it said.
The company assured their numerous customers of ongoing engagements between the Commission and shareholders including the Bureau of Public Enterprises and Lenders as to address the long-running and current issues at Kaduna Electric.