Nigeria’s electricity overseer is initiating the sale of the sixth largest power distribution company, Kaduna Electricity Distribution Plc (Kaduna Electric), due to a substantial $130 million debt.
This move comes less than two years after the company’s takeover by lenders, who struggled to reverse its financial fortunes.
Nigeria, the largest economy in Africa, grapples with the profitability of its 11 power distribution companies.
Challenges arise from insufficient capital and economically unfavorable tariffs set by the Nigerian Electricity Regulatory Commission (NERC).
Kaduna Electric, operating in four northern states, emerged in 2013 as one of the 18 successor companies resulting from the privatization of the defunct Power Holding Company of Nigeria.
The utility is burdened with a debt of 110 billion naira ($130 million), owed to entities like the Nigerian Bulk Electricity Trader and power generation firms, as disclosed by NERC in a recent notice.
NERC, invoking a law enacted last year, classifies the company as a ‘failing licensee,’ enabling the dissolution of its board.
Despite being under the control of African Export-Import Bank (Afreximbank) and local lender Fidelity Bank since July 2022, Kaduna Electric has faced ongoing financial challenges.
The Nigerian government, holding a 40% stake through the Bureau of Public Enterprises, is also involved.
To manage the interim proceedings, NERC has appointed an administrator and special directors for Kaduna Electric, with the intention to auction its assets to the highest bidder.
Nigeria, a country in West Africa, has more than 200 million people. But, it faces a big challenge when it comes to providing enough electricity.
This means that many homes and businesses in Nigeria don’t have enough power. To deal with this problem, a lot of people and businesses have to use their own generators because the country can only generate 12,500 megawatts of power. This isn’t enough to meet the needs of everyone in the country.
