The Nigerian Electricity Regulatory Commission (NERC) says it will cancel the electricity distribution license issued to Kaduna Electricity Distribution Company (KAEDCO) for defaulting on is payment to the tune of over N93.42 billion.
“Take note that KAEDCO is hereby given 60 days from the date of this notice to show cause why the electricity distribution license should not be cancelled in accordance with section 74 of EPSRA,” NERC said in a notice tagged: NERC/LC/023.
The circular was 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 license revoked.
KAEDCO only paid 13.85 percent 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 between January and December 2022.
That 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, a new NERC performance review for 2022 that was released today showed.
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 and recorded an average monthly market shortfall (underpayment) of NGN4.33billion.
The report showed it under-collected its revenues to the tune of NGN88.75billion being the sum of its market shortfall, 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.
The federal commission said KAEDC’s management team has not been able to develop and present a clear pathway towards capital injection, operational efficiency, and sustainability despite the various regulatory initiatives of the Commission and other financial interventions of the government.
