News - December 8, 2021

Real reason Abuja DISCO management was replaced by an interim board

By Bassey Udo

The regulatory authorities in the country’s power sector have given the reasons the management of the Abuja Electricity Distribution Company (AEDC) was replaced on Tuesday by an interim board.

Following workers industrial action over non-payment of arrears of salaries and other benefits, the Minister of State for Power, Goddy Jeddy Agba, on Tuesday announced the indefinite suspension of the management of the Abuja Electricity Distribution Company (AEDC).

The Minister said the management of the company would be replaced by a new interim board to take charge of the company till further notice.

Agba said the decision to replace the management of the electricity distribution company with an inyerim board was taken at the end of joint meeting with the Chairman, Nigeria Electricity Regulatory Commission (NERC), Sanusi Garba; Director General, Bureau of Public Enterprises (BPE), Alex Okoh, and the representative of the Nigerian Union of Electricity Employees (NUEE), Joe Ajaero, in Abuja.

Following the announcement, there were reports linking the changes in the management of the company to the industrial action by the workers that preceded the decision.

The workers had suspended normal services for over 14 hours on Monday to protest against the non-payment of their entitlements and benefits, including salary arrears, pension and gratuity as well as other allowances.

During the protest spearheaded by the Nigerian Union of Electricity Employees (NUEE), normal supply of electricity to consumers and other services to Abuja and environs were disrupted for more than 14 hours.

Apart from the Federal Capital Territory (FCT), other places were thrown into darkness for several hours, including Kogi, Nasarawa, Kaduna and parts of Edo states.

The protest was called off only after the intervention of the Minister of Power, Aliyu Abubakar, and the BPE DG, who met and dialogued with NUEE representatives.

However, NERC and BPE in a joint statement in Abuja on Wednesday debunked media reports that the suspension of the erstwhile management at AEDC was as a result of a directive by the Federal Government.

The regulators, however, gave the real reasons the management of the Abuja DISCO was replaced by an interim board.

In the statement jointly signed by the Chairman of NERC, Sanusi Garba, and BPE Director General, Alex Okoh, the regulatory authorities traced the decision to a subsisting dispute between competing factions of AEDC’s majority shareholder/core investors, KANN Utility Company Limited (KANN).

The regulators said the dispute, which predated the acquisition of AEDC’s operational license during the privatisation exercise in 2013, revolved around a loan granted to KANN for the acquisition of majority shares in the company.

Following the inability of KANN to service the loan, the regulators said the dispute that ensued eventually spilled over to a major crisis with the lenders, culminating in the poor service delivery by AEDC.

“The attention of the Nigerian Electricity Regulatory Commission (NERC) and Bureau of Public Enterprises (BPE) has been drawn to misrepresentations in the press on the facts/circumstances leading to the change in the composition
of the board of Abuja Electricity Distribution Plc (AEDC) or the DisCo, the licenced utility that serves end-use customers in Kogi, Nasarawa, Niger and the Federal Capital Territory.

“The general public may wish to note that there has been an ongoing dispute amongst competing factions of AEDC’s majority shareholderlcore investor ie KANN Ulity Company Limited (KANN), and this dispute eventually spilled over to a dispute with the lender that provided the acquisition loan to KANN for the acquisition of majority shares during the privatisation exercise in 2013, over KANN’s inability to service its debt to the Bank.”

During the course of the intractable crisis, NERC and BPE said AEDC not only struggled to meet its obligations to the market under the terms and conditions of its licence, but was also unable to meet its obligations to key stakeholders in the organisation, including staff, cuiminating 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 December 2021.

Consequent upon KANN’s inability to service its acquisition loan, and the ensuing dispute over the servicing of the loan from UBA Plc, BPE said the lender decided to exercise its rights by appointing a Receiver/Manager over KANN stakeholders, including NERC, Central Bank of Nigeria (CBN) and BPE.

The exercise of the right, BPE said, was despite several attempts in the past to broker an amicable resolution of the dispute between the contending parties.

The protracted crisis, the regulatory authorities said, exacerbated the state of affairs at AEDC, resulting in an industrial action and a total blackout in the service area for over 14 hours on Monday.

To restore normalcy, BPE said it decided to take steps to resolve the matter, by agreeing with the lending bank to exercise its powers as Receiver/Manager over KANN, in respect of over the 60 percent equity in AEDC as a means to recovering the outstanding loan.

The regulators also denied that the decision to appoint an interim management for AEDC was as a result of a directive from the Presidency, but on the basis of legal processes that arose from the failure of KANN to meet its obligations to the bank as the core investor in the company.

Consequently, BPE said the Receiver/Manager agreed to appoint an interim management team in conjunction with BPE as part of measures designed to address the business failure by KANN and ensure continuity of service to end-use
customers in the service area.

They assured that the Federal Government remained committed to the ongoing initiatives on the recovery of the electricity sector, adding that private investors must recognize their responsibilities to their stakeholders, especially in regulated utilities and should not act in a manner that would jeopardize public interest.

“NERC and BPE shall continue to work constructively with key stakeholders in the power sector to ensure continued growth and service improvement under the reforms being embarked upon by the Federal Government for the
socio-economic growth of our great nation,” the statement said.

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