Following the failure to meet cumulative market obligations and prolonged financial and operational challenges, the Nigeria Electricity Regulatory Commission (NERC) has dissolved the board of the Kaduna Electricity Distribution Company (KAEDCO). KAEDCO had incurred a massive debt of N456.5 billion over the years, with no sign of improving its financial and operational performance to meet obligations owed to both its customers and investors. NERC took the step under Interim Order No. NERC/2026/086, pursuant to Sections 75 to 79 of the Electricity Act 2023. The commission stated that, as of May this year, KAEDCO had accumulated an additional debt of N186.6 billion, bringing its total market debt profile to N456.5 billion. NERC further said the Disco was only able to remit 41.93 per cent of its invoices last year, while its Aggregate Technical, Commercial and Collection (ATC&C) losses stood at 71.88 per cent. The commission also stated that Kaduna Disco invested only a paltry N2.48 billion against a capital requirement of N24.51 billion. Customer metering within the Disco’s coverage area was also recorded at below 36 per cent. NERC has announced the constitution of an interim management board to run the affairs of the company for six months in order to ensure continuity of service to its customers. Afreximbank will also be tasked with finding a core investor for the company within 12 months. KAEDCO emerged from the unbundling of the Power Holding Company of Nigeria (PHCN). It was incorporated in 2005 and privatised on December 4, 2014. It was one of the 13 successor entities to PHCN licensed to distribute electricity across the country during the privatisation of Nigeria’s power sector. Like many other Discos, KAEDCO has faced enduring challenges, including energy theft, inadequate metering and customer payment apathy, among others. The current regulatory intervention by NERC is the second of its kind. The first occurred in 2024, when the company had incurred a debt of more than N110 billion to the Nigerian Electricity Supply Industry. The dissolution of KAEDCO is the latest in a series of regulatory actions taken against Discos in the country over issues of a similar nature. So far, six Discos — Abuja, Benin, Kano, Ibadan, Port Harcourt and Kaduna — have been taken over, either directly by banks that are their creditors or by NERC, which had stood as guarantor to the Discos during the privatisation exercise. A closer look at the affected Discos shows that they are all victims of similar, if not identical, problems that have contributed to their collapse. This recurring crisis establishes the fact that there is something fundamentally wrong with the manner in which these companies emerged and operated. It is increasingly clear that, under the privatisation exercise, the entities that took over the generation and distribution of electricity in the country were conceived and selected with little or no due diligence. Many of the entities lacked the capital and technical capacity required to meet the objectives for which they were established. It is difficult to escape the conclusion that some of those who took over this onerous responsibility were primarily interested in making quick profits. Worse still, those charged with ensuring due diligence in the process appeared to have failed in their responsibilities. The result is what Nigerians have experienced in the power sector since the reform was launched. Most worrying is that the problems in the sector are systemic, running from generation to transmission and distribution. Unfortunately, rather than taking firm measures to address the deteriorating situation, successive ministers have often focused on telling Nigerians that increasing electricity tariffs is the only way to solve the problem. We have to admit that, as things stand, the mounting problems in Nigeria’s power sector are approaching crisis proportions. In this regard, we strongly recommend that the government summon the courage and political will to holistically review the 2005 power sector reforms, with a view to identifying structural defects and applying the necessary corrections. We also recommend that the government engage partners with proven technical capacity, experience and capital to participate in Nigeria’s power sector. While not discounting the involvement of local companies, we must be diligent enough to ensure that only those with proven technical capabilities are engaged. From solar, hydro, thermal and wind to other sources, Nigeria has abundant potential for electricity generation to satisfy its energy needs. All these sources must be properly explored and exploited. Nigerians are saying enough of continuous darkness and its attendant negative consequences. What is needed now is for all stakeholders in the sector to come together and address the underlying problems in order to set Nigeria on the path to the much-desired energy revolution.
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