By Bassey Udo
The Bureau of Public Enterprises (BPE) has named the interim management team constituted for the Abuja Electricity Distribution Company (AEDC) Plc amid allegations of hostile takeover scheme engineered by some powerful persons in the power sector and other sectors of the economy.
The constitution of the interim management board for the electricity distribution company followed last Tuesday’s suspension of the incumbent management over the alleged inability to meet the terms of its agreements and obligations with its bankers.
Interim management Boad
The new five-member interim board has a one-time Managing Director of the Transmission Company of Nigeria (TCN), Bada Akinwumi, as the new Managing Director, to lead the management of the AEDC till further notice.
Announcing the new interim board, the BPE in a statement in Abuja signed by its spokesperson, Amina Tukur Othman said other members included Sani Usman as the Chief Business Officer; Babajide Ibironke as Chief Finance Officer; Donald Etim as Chief Marketing Officer, and Femi Zachaeus as Chief Technical Officer.
The privatization agency said NERC, the regulator in the power sector, has already approved the appointment of the interim management team for the company.
In approving the appointment of the new management for the AEDC, BPE said NERC Chairman, Sanusi Garba, said the change in management was pursuant to BPE’s review of nominees based on the context of business continuity framework of the Nigerian Electricity Supply Industry (NESI).
On Tuesday the erstwhile management team of the AEDC was removed at the end of a joint meeting between officials of the Federal Ministry of Power, NERC, BPE and representatives of the National Union of Electricity Employees (NUEE).
The meeting followed an industrial action by the workers’ union to protest alleged unpaid benefits and entitlements, including salaries, pension and gratuity as well as allowances.
The protest grounded normal operations of AEDC, resulting in the disruption of electricity supply in and around the franchise areas of the company, including parts of the Federal Capital Territory, Kogi, Nasarawa, Kaduna and Edo states.
At the end of the meeting, it was Minister of State for Power, Geddy Agba, said the interim board was appointed to manage the power distribution company till further notice.
The minister said the decision to remove the previous management and install a new one was based on the strength of legal processes established following the failure of the core investors in AEDC to meet its obligations spelled out in the loan agreement it entered with its bankers prior to the privatization programme in 2013.
However, since the removal of the erstwhile management, speculations have been rife that some powerful persons were for some time working with NERC and BPE officials to create an environment that would justify a takeover of AEDC to consolidate their control of the power sector.
Hand of Esau
An operator in the power sector, who is familiar with the issues, told our reporter on Thursday in Abuja that the sack of AEDC management may have been by UBA over the alleged inability of the majority shareholder to meet its loan payment obligation, by the shadows of its Chairman, Tony Elumelu, who is also the Chairman of Transcorp Group, operators of Transcorp Power Limited, looms larger than could be ignored by a wave of the hand.
The operator, who requested that his name should not be revealed in view of the sensitive nature of the information said: “UBA may be the hand of Esau used to take over the company. As the Chairman of Transcorp Group, operators of Transcorp Power Limited, Elumelu has not hidden his interest to emerge as the major force controlling the country’s power industry value chain.
“As the Chairman of the company operating some of Nigeria’s biggest power plants located at Ughelli and Afam, there is nothing stopping Elumelu from leveraging his connections with the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, using the Bankers’ Committee, to create the crisis that UBA latched on to take over AEDC, to add the distribution arm of the power industry to his expanding portfolio.
“They might deny today about that possibility. But let’s continue to watch as events unfold in the coming days,” the operator said.
BPE insists everything’s normal
But the BPE appears to hold the view that this might not be the case. BPE, in a joint statement signed by the Chairman, Sanusi Garba of NERC, and its Director-General, Alex Okoh, on Wednesday, explained that the sack of the former management of AEDC was as a result of an ongoing dispute.
They said the dispute among competing factions of AEDC’s majority shareholder/core investor, namely KANN Utility Company Limited (KANN), which eventually spilled over to the management of the company, resulting in its inability to meet its service obligations.
The management’s inability to deliver service to its customers was said to have affected its inability to generate enough funding to pay back its loan, leading to the lender, United Bank for Africa (UBA), which provided the acquisition loan to KANN for the acquisition of majority shares during the privatization exercise in 2013, stepping in to protect KANN’s 60 percent equity in the company in lieu of the debt.
“The United Bank for Africa (UBA) had acted as Mandated Lead Arranger, underwriting the entire facility of $122million, about N20 billion then, for KANN Utilities acquisition of the Abuja Electricity Distribution Company,” BPE explained.
“During the course of the intractable crisis, AEDC not only struggled to meet its obligations to the market under the terms and conditions of its license but was also unable to meet its obligations to key stakeholders in the organization, including staff, culminating in the industrial action by members of the Nigerian Union of Electricity Employees (NUEE).
“Eventually, this resulted in a total service disruption on 6th December 2021 for over 14 hours in AEDC’s network area. The provision of electricity supply in AEDC’s network area was only restored after the intervention of the Minister of Power, NERC, and BPE following an agreement with the union on the terms for the suspension of the industrial action on 6th of December 2021,” BPE added.
BPE insisted the sack of the previous management of AEDC followed KANN’s inability to service its acquisition loan, resulting in UBA deciding to exercise its rights by appointing a Receiver/Manager over KANN.
The privatization agency said its role was to work with other stakeholders, including NERC, and Central Bank of Nigeria (CBN) to broker an amicable resolution between the contending parties.
“The protracted resolution of the dispute exacerbated the state of affairs at AEDC, resulting in industrial action and a total blackout in the service area for over 14 hours.
“It then became apparent that decisive steps were required to address the matter, and BPE agreed, with the lender’s request, to exercise its powers as Receiver/Manager over KANN, by exercising its powers over the 60% equity in AEDC, as a means to recovering the acquisition loan granted by the Bank.
“The action to appoint an interim team to manage AEDC was on the basis of legal processes arising from the failure of the core investor in AEDC to meet its obligations to a lender.
“The Receiver/Manager has agreed to the appointment of an interim management team in conjunction with BPE as part of measures designed to address business failure events and ensure continuity of service to end-user customers in the service area,” BPE said.
