• Wednesday, February 28, 2024
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Nigeria to sell Kaduna power distribution firm over $130 million debt

Nigeria to sell Kaduna power distribution firm over $130 million debt

Nigeria’s electricity regulator has put up for sale the sixth largest power distribution utility over a $130 million debt, less than two years after the lenders who took over the company failed to turn it around and make it profitable.

Africa’s biggest economy, Nigeria, has 11 power distribution companies but they are struggling to remain profitable because of lack of capital and sub-economic tariffs imposed by the Nigerian Electricity Regulatory Commission (NERC).

Kaduna Electricity Distribution Plc (Kaduna Electric) is one of 18 successor companies created following the privatisation of the defunct Power Holding Company of Nigeria in 2013 and sells electricity in four northern states.

According to Reuters the utility owes 110 billion naira ($130 million), NERC said in a notice on Monday, to companies including the Nigerian Bulk Electricity Trader and power generation firms. The regulator said it now considered the company a ‘failing licensee’, allowing NERC to dissolve its board using a law passed last year.
Kaduna Electric was taken over by African Export-Import Bank (Afreximbank) and local lender Fidelity Bank in July 2022 but they have struggled to improve its financial performance. The Nigerian government through its Bureau of Public Enterprises also owns a 40% stake.

NERC said it had appointed an administrator and special directors to manage Kaduna Electric in the interim and sell its assets to the highest bidder.

Nigeria, Africa’s most populous nation of more than 200 million people, produces a fraction of its installed power generation capacity of 12,500 megawatts, leaving millions of households and businesses reliant on private generators for electricity.