NERC dissolves Kaduna Disco Board over N456.6b debt

• Lists Utility’s offences

By Oluwayanmife Lucas

The Nigerian Electricity Regulatory Commission (NERC) yesterday sacked the Board of Kaduna Electricity Distribution Company (KAEDC) over the utility’s N456.5 billion cumulative market obligations and prolonged financial and operational challenges.

The announcement was contained in the Commission’s regulatory Order No. NERC/2026/086, titled “Order on the Regulatory Intervention in Kaduna Electricity Distribution Plc Pursuant to the Electricity Act 2023”, which took effect yesterday. It was signed by its Chairman, Musliu Oseni and Commissioner for Legal, Licensing and Compliance, Dafe Akpeneye.

The NERC also directed Afrexim Bank to coordinate an open, competitive and transparent process for securing a replacement core investor for KAEDC. The preferred investor is to be presented to NERC for approval, with the process to be completed within 12 months from the commencement of the Order unless the Commission grants a written extension

According to the regulator, the dissolution of Kaduna DisCo’s Board became inevitable owing to the precarious situation at the Disco which has been further characterised by prolonged regulatory and market defaults, inadequate investment, weak operational and commercial performance, insufficient assets relative to liabilities, and the inability to present a credible pathway to sustainable recovery.

The Commission explained that the intervention became inevitable following an inquiry and consultations with key industry stakeholders, including the Bureau of Public Enterprises (BPE). It also cited the KAEDC’s prolonged regulatory and market defaults, inadequate investment and weak operational and commercial performance.

For instance, since privatization, KAEDC’s cumulative market obligation stands at approximately N456.5b as of May 2026. This comprises of N415.5b owed to the Nigerian Bulk Electricity Trading (NBET) Plc and N41b due to the Nigerian Independent System Operator (NISO). Other non-market statutory and third-party obligations of KAEDC include N14.26b.

“KAEDC’s Board of directors is HEREBY DISSOLVED. All directors of KAEDC are removed from office, and the existing board stands dissolved pursuant to Section 75 of the EA.

“The Commission has notified the Corporate Affairs Commission (“CAC”) and other relevant stakeholders of the dissolution of the board. The CAC shall not register or give effect to any change in the company’s shareholding, directorship or constitutional records during the special transition period without the Commission’s prior written approval,” NERC stated.

The regulator further disclosed that following the June 2024 ASI Engineering Limited takeover of KAEDC’s operations, the company had accrued additional market debt of more than N118.6b as of May 2026.

“The commission, following its inquiry and consultation undertaken with key industry stakeholders including the Bureau of Public Enterprises, finds that Kaduna Electricity Distribution Plc is in a grave situation characterised by prolonged regulatory and market default, inadequate investment, weak operational and commercial performance, insufficient assets relative to liabilities, and inability to present a credible pathway to sustainable recovery,” the commission stated.

The NERC also hinted that KAEDC paid only 41.93 per cent of its adjusted market invoices in 2025, resulting in a market shortfall of approximately N46.71b during the year. Other offences leading to the dissolution of the board includes: poor remittance performance to the company’s high aggregate technical, commercial and collection losses, which stood at 71.88 per cent in 2025. This translates to KAEDC not able to account for 72.8 per cent of the electricity received and delivered to end-use customers during the review period, as it could only account for 28.2 per cent of the electricity.

Still, other offences are failure of ASI to meet its capital injection commitments towards recapitalising the Disco, as KAEDC’s actual capital expenditure in 2025 was approximately N2.48b, against a minimum capital expenditure provision of N24.51b; unimpressive meter coverage which had remained between 33.26 per cent and 35.54 per cent since ASI took over the company, despite several interventions aimed at supporting meter deployment across electricity distribution companies.

“The KAEDC’s financial difficulties persisted despite approximately N6.58b in regulatory derogations granted between January 2024 and May 2026 and aggregate Federal Government intervention disbursements of approximately N53.79b since July 2018.

“The continued underperformance therefore poses material risk to end-use customers, creditors, market stability and continuity of electricity service. The analysis confirms that KAEDC is experiencing severe liquidity constraints and that its commercial viability and continued participation in the market pose a systemic risk to NESI,” the NERC Order said.

NERC said it had previously notified KAEDC’s major shareholders and Afrexim Bank of the imminent regulatory intervention and required them to present a credible plan to address the company’s financial situation.

It said representatives of ASI, NERC, BPE, Afrexim and Fidelity Bank met on June 11, 2026, to discuss proposals for rescuing KAEDC.

The commission said all parties at the meeting agreed that ASI had not complied with conditions prescribed for its acquisition of a 60 per cent majority shareholding in KAEDC and had also failed to comply with BPE requirements for finalising the shareholding arrangements.

It explained that ASI subsequently requested an extension of up to 24 months to stabilise KAEDC’s cash flow, prioritise critical investments and deliver measurable performance improvements, including a pathway to full market remittance.

This option was however rejected by the NERC, insisting that since June 2024, ASI had been in effective control of KAEDC without a corresponding improvement in the company’s financial and operational performance.

“The commission, BPE and Afrexim considered this request against the backdrop of ASI being in effective control of KAEDC since June 2024 without a corresponding improvement in the utility’s financial and operational performance, and determined that a further extension of comparable duration was not justifiable in view of the continuing risk to end-use customers and the market,” NERC stated.

Consequently, the NERC invoked its powers under Sections 75 to 79 of the Electricity Act 2023 to dissolve KAEDC’s board and preserve the company as a going concern while achieving a transparent transition to a credible core investor within 12 months.

NERC listed the critical nature of KAEDC’s financial difficulties, the risk of further delay leading to disruptive cessation of distribution services, ASI’s failure to fulfil takeover conditions after more than 24 months of effective control, and the need for the regulator to act with certainty while protecting the interests of stakeholders.

“KAEDC has persistently demonstrated its inability to discharge material obligations, remained in prolonged default of obligations under the Electricity Act, its licence and regulatory instruments, and had experienced governance conditions detrimental to stakeholders and the undertaking,” the commission said, insisting that the utility had insufficient assets relative to liabilities, with material insolvency and receivership risks.

The NERC therefore appointed an interim special seven-member board comprising Dr. Abdullahi Garba, Engr. Francis U. Agoha, Aliyu E. Aliyu, Major General Henry E. Ayamasaowei (rtd.), Dr. Haliru Dikko, Ayodeji A. Gbeleyi (representing the Bureau of Public Enterprises), and Dr. Abubakar Umar Hashidu.

NERC also said the incumbent Managing Director/Chief Executive Officer, Dr. Abubakar Umar Hashidu, has been appointed as Administrator for an initial term of six months, subject to review by the Commission.