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NERC takes decisive action, dissolves KAEDC board over ₦110 billion debt crisis

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NERC takes decisive action, dissolves KAEDC board over ₦110 billion debt crisis

Kaduna electricity distribution company faces overhaul as debt woes escalate

 

In a sweeping move, the Nigerian Electricity Regulatory Commission (NERC) announced the dissolution of the Board of Directors of Kaduna Electricity Distribution Company (KAEDC) on Monday, citing the company’s inability to settle a staggering ₦110 billion debt owed to the Nigerian Electricity Supply Industry (NESI). The decision, outlined in a document jointly signed by NERC Chairman Sanusi Garba and Vice Chairman Musiliu Oseni, comes as KAEDC grapples with financial turmoil, raising concerns about its viability and impact on the electricity sector.

 

The dissolution is a culmination of KAEDC’s failure to repay the significant debt incurred, leading to a takeover by its funders after core investors struggled to repay borrowed funds used to acquire the company during privatization in 2013. The repercussions of this financial crisis extend beyond the company’s balance sheet, prompting the resignation of Managing Director Yusuf Yahaya on Saturday.

 

Debt woes and receivership

 

KAEDC’s financial struggles are underscored by its indebtedness to the Nigerian Bulk Electricity Trading (NBET) and Transmission Company of Nigeria (TCN’s) Market Operator (MO), amounting to ₦110 billion from 2015 to the present, as revealed in the NERC document. The inability to secure new ownership within a specified timeframe prompted the receivership, led by Afrexim Bank, to request an extension beyond the initial 30 days given in July 2023.

 

According to the document, Afrexim Bank sought four to six months to finalize the divestment process. However, the company faltered in providing the required bank guarantees to secure KAEDC’s market obligation. This failure triggered a domino effect, jeopardizing the jobs of KAEDC’s board of directors.

 

“All directors of KAEDC are hereby removed from office, and the board of directors stands dissolved in the exercise of powers vested in the commission by Section 75 of the Electricity Act (EA),” the document stated.

 

Appointment of administrator and special directors

 

In response to the dissolution, Mr. Umar Hashidu has been appointed as the administrator of KAEDC, taking on the role of the de facto Chief Executive Officer. He will assume responsibilities for the day-to-day affairs of the utility until the finalization of the sale of the undertaking to a new core investor.

 

The administrator will collaborate with a team of special directors, appointed for governance purposes. The newly appointed special directors for KAEDC include Alex Okoh as Chairman, along with Kabir Adamu, Sharfuddeen Mahmoud, John Ayodele, and Rahila Thomas.

 

“The commission shall administer the sale of the undertaking in accordance with the provisions of the EA on the basis of the highest and best price offered for the undertaking,” the document affirmed.

 

Immediate measures and ongoing oversight

 

NERC’s intervention aims to stabilize KAEDC’s operations, address its financial challenges, and ensure a smooth transition to new ownership. The appointment of an administrator and special directors underscores the urgency of the situation, emphasizing the need for swift action to protect the interests of all stakeholders.

 

As the process unfolds, the commission will continue to closely monitor the proceedings, with the expectation that the sale of the undertaking will adhere to the highest standards of transparency and efficiency.

 

Industry impact and future outlook

 

The dissolution of KAEDC’s board sends ripples through the electricity distribution sector, raising questions about the financial health of other distribution companies and the broader implications for Nigeria’s power sector. The move reflects the regulatory authorities’ commitment to maintaining financial discipline and accountability within the industry.

 

As the dust settles on KAEDC’s debt crisis, the attention will shift to the potential impact on electricity consumers, the stability of the national grid, and the strategies the government and regulatory bodies will employ to prevent similar crises in the future.

 

Paradigm shift in Nigeria’s energy landscape

 

NERC’s decisive action to dissolve the KAEDC board marks a paradigm shift in Nigeria’s energy landscape, signaling a commitment to address financial irregularities and ensure the sustainability of the electricity sector. The move serves as a stern warning to other distribution companies to uphold financial responsibility and transparency in their operations.

 

The appointment of an administrator and special directors reflects a meticulous approach to navigate the complexities of the situation, emphasizing the importance of competent leadership to steer KAEDC through this challenging period.

 

As the industry recalibrates in the aftermath of this significant development, stakeholders, investors, and the public will closely observe the unfolding events, hoping for a robust and resilient electricity sector that can power Nigeria’s growth and development in the years to come.

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Nigeria International Energy Summit 2024: focus on collaboration as petroleum producers forum takes centre stage

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Nigeria International Energy Summit 2024: Focus on Collaboration as Petroleum Producers Forum Takes Center Stage

Nigeria International Energy Summit 2024: focus on collaboration as petroleum producers forum akes centre stage

 

Amidst the backdrop of a rapidly evolving energy landscape, the Nigeria International Energy Summit (NIES) 2024 emerges as a pivotal platform for fostering collaboration and cooperation among players in the pursuit of sustainable energy solutions. Spearheaded by James Shindi, Chief Executive of Brevity Anderson and consultant to NIES, this year’s summit marks the seventh iteration in a series dedicated to catalyzing dialogue and innovation within the energy sector.

In a statement on Sunday, Shindi underscored the overarching objective of NIES 2024, emphasising its steadfast commitment to nurturing a climate of collaboration conducive to addressing critical challenges confronting independent energy producers. Central to this endeavour is the inception of a groundbreaking session entitled the Nigerian Petroleum Producers’ Forum—a novel initiative aimed at galvanizing industry leaders towards collective action and shared insights.

Themed “Innovation, Collaboration, and Resilience: Empowering Independent Producers in the Dynamic Energy Era,” this innovative platform promises to empower independent producers, equipping them with the tools and strategies necessary to navigate the complex and ever-shifting terrain of the energy industry. By fostering a culture of resilience and adaptability, NIES 2024 seeks to lay the groundwork for sustainable growth and prosperity within the sector.

At the forefront of discussions will be an exploration of the myriad of challenges confronting independent energy producers, coupled with actionable strategies designed to promote innovation and collaboration. This holistic approach underscores the imperative of fostering a symbiotic relationship among stakeholders, wherein mutual benefit and collective advancement reign supreme.

Integral to the agenda is the identification of policy interventions tailored to support independent producers amidst the dynamic energy landscape. By sharing best practices and success stories from diverse regions, NIES 2024 aims to provide policymakers with practical insights to inform the formulation of supportive policies and regulations conducive to sectoral growth and stability.

The summit boasts an impressive lineup of speakers, including Senator Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil), who will deliver a keynote address setting the tone for deliberations. Joining him is Osagie Okunbor, Country Chair/CEO of Shell Companies in Nigeria and Chairman of the Oil Producers Trade Section (OPTS), whose wealth of experience promises invaluable insights into industry dynamics and challenges.

Rounding out the panel of speakers are Gbenga Komolafe, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, and Abdulrazaq Isa, Chairman of the Independent Petroleum Producers Group/Waltersmith Group, whose opening keynote speech will set the stage for fruitful discourse and collaboration.

As different players in the energy sector gather at NIES 2024, the stage is set for a convergence of minds, ideas, and aspirations, as the industry charts a course towards a future defined by innovation, collaboration, and resilience. Against the backdrop of mounting challenges and opportunities, the summit stands as a beacon of hope, illuminating the path towards a sustainable and prosperous energy future for Nigeria and beyond.

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Fuel scarcity looms as NARTO declares petroleum transporters’ strike amid soaring operational costs

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NARTO Declares Petroleum Transporters' Strike Amid Soaring Operational Costs: Fuel Scarcity Looms

Fuel scarcity looms as NARTO declares petroleum transporters’ strike amid soaring operational costs

 

In a bid to address the dire economic challenges plaguing Nigeria’s petroleum industry, the Nigerian Association of Road Transport Owners (NARTO) has issued a resolute directive to its members, mandating them to halt the loading of petroleum products effective Monday, February 19, 2024. This drastic measure, stemming from the crippling burden of skyrocketing operational costs, threatens to unleash fuel scarcity and exacerbate the nation’s economic woes.

In a formal communiqué addressed to the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), NARTO lamented the insurmountable hurdles gripping the sector, rendering their operations financially untenable. The missive underscored the association’s relentless pursuit of viable solutions to mitigate these challenges, including fervent appeals to relevant authorities for a sustainable adjustment in freight rates. Regrettably, these entreaties have fallen on deaf ears, exacerbating the plight of petroleum truck owners.

Quoting excerpts from the correspondence, NARTO articulated its poignant plea, stating, “We are deeply constrained to seek the support and understanding of your union and members towards the excruciating challenges petroleum truck owners are facing with the high operational costs in the industry.” Despite relentless efforts to engage key stakeholders, such as the Major Energy Marketers Association of Nigeria, in constructive dialogues, the resounding silence has left NARTO with no recourse but to initiate this decisive course of action.

Echoing the gravity of the situation, NARTO’s National Executive Council (NEC) unanimously endorsed the directive, compelling members to withhold their petroleum trucks from loading activities, effective February 19, 2024. The association implored petroleum truck drivers, who are integral members of NUPENG, to extend unwavering support in solidarity with NARTO’s quest for sustainable viability within the petroleum haulage sector.

The ramifications of NARTO’s impending strike reverberate across the nation, with the specter of fuel scarcity looming ominously. Such an outcome threatens to unleash a domino effect, triggering inflationary pressures and impeding economic growth trajectories. The ramifications extend beyond mere inconvenience, posing a formidable threat to the socioeconomic fabric of Nigeria.

In a concerted effort to avert this impending crisis, the Federal Government, in collaboration with downstream regulators and the Ministry of Petroleum Resources, is poised to convene a high-stakes meeting in Abuja on Monday. This crucial summit aims to foster constructive dialogue, facilitating a harmonious resolution to the impasse between NARTO and pertinent stakeholders. The deliberations aspire to chart a pragmatic pathway forward, one that safeguards the interests of all parties while ensuring the uninterrupted flow of petroleum products vital to Nigeria’s economic vitality.

Against the backdrop of escalating tensions and mounting apprehensions, the nation stands at a pivotal juncture, poised between the precipice of economic instability and the promise of collaborative resolution. The outcome of Monday’s deliberations holds profound implications, not merely for the petroleum industry, but for the collective welfare and prosperity of Nigeria as a whole.

As the clock ticks inexorably towards the fateful hour, stakeholders brace themselves for a pivotal reckoning, acutely aware of the stakes at hand. In the crucible of adversity, the resilience and ingenuity of Nigeria’s populace are poised to emerge triumphant, navigating the turbulent currents towards a brighter, more prosperous horizon.

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Fuel Scarcity Looms as Tanker Owners Threaten Nationwide Shutdown Over Rising Diesel Costs

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Fuel Scarcity Looms as Tanker Owners Threaten Nationwide Shutdown Over Rising Diesel Costs

Fuel Scarcity Looms as Tanker Owners Threaten Nationwide Shutdown Over Rising Diesel Costs

As Nigerians grapple with ongoing economic challenges, the specter of fuel scarcity looms large once again as the Nigerian Association of Road Transport Owners (NARTO) threatens to halt petrol lifting operations starting Monday, February 19, 2024. The impending shutdown, triggered by the exorbitant cost of diesel, could exacerbate the nation’s fuel supply woes, compounding the woes of already burdened citizens.

A Dire Warning

In a stern declaration made on Thursday, February 15, 2024, in Abuja, NARTO President, Yusuf Othman, sounded the alarm, announcing that members of the association would ground their tanker fleets in response to unsustainable operating costs. Highlighting the financial strain caused by the skyrocketing prices of diesel, Othman lamented that operational expenses far outweighed revenue, compelling members to consider drastic action.

Pleading for Attention

Despite repeated appeals to key stakeholders in the oil sector and President Bola Tinubu, NARTO’s pleas for intervention have fallen on deaf ears. Othman bemoaned the lack of response to their letters addressed to various government agencies and industry leaders, expressing frustration over the failure to address their grievances.

Market Realities and Rising Costs

Providing insights into the market dynamics, Othman underscored the disparity between prevailing market rates and stagnant freight rates. He cited the unyielding freight rates, set during the previous administration, as untenable in the face of escalating operational expenses. With diesel prices soaring and freight rates unchanged, tanker owners find themselves operating at a significant loss, unable to cover basic expenses such as fuel, vehicle maintenance, and driver allowances.

The Burden of Bridging

Othman shed light on the stark financial realities faced by tanker drivers, particularly in the transportation of petroleum products within and across states. Highlighting the exorbitant costs associated with local and bridging operations, he revealed the glaring mismatch between government compensation and actual operational expenditures. Despite the substantial financial outlay required for diesel and logistical support, transporters are left grappling with inadequate compensation, further exacerbating their financial woes.

Implications for the Nation

The impending shutdown of petrol lifting operations could have far-reaching consequences for Nigeria’s already strained economy and populace. With fuel scarcity likely to disrupt transportation, commerce, and daily life, citizens are bracing for heightened uncertainty and economic hardship. As the deadline approaches, all eyes are on government authorities to address the grievances of NARTO and avert a nationwide crisis.

As Nigeria teeters on the brink of yet another fuel crisis, the urgency to address the underlying issues of diesel costs and operational challenges becomes increasingly imperative to safeguard the nation’s economic stability and well-being of its citizens.

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