Barely 24 hours after it announced an indefinite suspension of Abuja Electricity Distribution Company (AEDC) management board, the Nigerian Electricity Regulatory Commission (NERC), on Wednesday, said the action to appoint an interim team to manage the DisCo, was not informed by Federal Government’s decision.
Rather, it said the move was based on legal processes, arising from the failure of the core investor in AEDC to meet its obligations to its lender.
The Minister of State for Power had via a statement issued by his Media Aide, Ofem Uket, on Tuesday, announced that President Muhammadu Buhari approved the suspension of the board and establishment of new interim management.
This came on the heels of an industrial action embarked on by the staff of the AEDC on Monday over unpaid entitlements.
But in a statement, jointly signed by NERC’s Chairman, Sanusi Garba and Director-General, Bureau of Public Enterprises(BPE) Alex Okoh, the Commission disclosed an ongoing dispute amongst competing factions of AEDC a majority shareholder/core investor I.e KANN Utility Company Limited (‘KANN”)
It explained that the dispute had eventually spilt 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 the core investor’s KANN’s inability to service its debt to the Bank.
“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,” it said.
It stressed that the industrial action was only suspended 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 the same day.
“The general public should note that arising from KANN s inability to service its acquisition loan and the ensuing dispute over the servicing of the loan from UBA Plc, the lender exercised its rights by appointing a Receiver/Manager over KANN
“Stakeholders including NERC Central Bank of N gena (‘CBN*) and BPE had on several times worked to broker an amicable resolution between the contending parties The protracted resolution of the dispute exacerbated the state of affairs at AEDC resulting in an industrial action and a total blackout in the service area for over 14 hours,” the statement read.
NERC further explained that the development led to BPE’s agreement with the lender’s request to exercise its powers as Receiver/Manager over KANN by exercising its powers over the 60 per cent equity in AEDC as a means to recover the acquisition loan granted by the Bank.
“The action to appoint an interim team to manage AEDC was not done on the basis of a directive from the Federal Government as being falsely reported in the press but 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-use customers in the service area,” it noted.
However, the Commission reiterated the government’s commitment to the ongoing initiatives on the recovery of the electricity sector but,” private investors should remain cognizant of their fiduciary responsibilities to their stakeholders especially in regulated utilities and should not act in a manner that jeopardizes 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.”
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