Nigeria’s electricity regulator has announced the sale of one of the country’s largest power distribution companies, Kaduna Electric, over a $130 million debt.
The Nigerian Electricity Regulatory Commission (NERC) said it considered the company a “failing licensee” and dissolved its board using a law passed last year.
Kaduna Electric, which sells electricity in four northern states, was taken over by African Export-Import Bank (Afreximbank) and local lender Fidelity Bank in July 2022, but they failed to improve its financial performance.
The utility owes 110 billion naira ($130 million) to various entities, including the Nigerian Bulk Electricity Trader and power generation firms, NERC said in a notice on Monday.
The regulator said it had appointed an administrator and special directors to manage Kaduna Electric in the interim and sell its assets to the highest bidder.
A Struggling Sector
Kaduna Electric is one of 11 power distribution companies in Nigeria, Africa’s most populous nation of more than 200 million people.
The companies were created following the privatization of the defunct Power Holding Company of Nigeria in 2013, but they have been struggling to remain profitable because of lack of capital and sub-economic tariffs imposed by NERC.
The Nigerian government, through its Bureau of Public Enterprises, also owns a 40% stake in the companies.
Nigeria 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.
The country’s power sector has been plagued by chronic underinvestment, poor maintenance, vandalism, corruption, and inefficiency.
A Promising Future
Despite the challenges, Nigeria has the potential to become a major player in the global energy market, with abundant natural gas reserves and renewable energy sources.
The country is also a signatory to the Paris Agreement on climate change and has committed to reducing its greenhouse gas emissions by 20% by 2030.
Several initiatives are underway to boost Nigeria’s power supply and diversify its energy mix, such as the Azura-Edo Independent Power Plant, the largest privately financed power project in Africa, and the Solar Power Naija programme, which aims to provide five million households with solar systems.
Experts say that improving Nigeria’s power sector is crucial for its economic development, social welfare, and environmental sustainability.
As the regulator seeks to sell off Kaduna Electric, many Nigerians hope that the move will pave the way for a more efficient and reliable power distribution system in the country.
Source: Reuters
