KAEDCO: Another failure of power reform

The Nigeria Electricity Regulatory Commission (NERC) has dissolved the board of Kaduna Electricity Distribution Company (KAEDCO) due to financial and operational failures. KAEDCO had accumulated a debt of N456.5 billion, with an additional N186.6 billion incurred as of May this year, totaling N456.5 billion. The company only remitted 41.93% of its invoices last year, with Aggregate Technical, Commercial and Collection (ATC&C) losses standing at 71.88%.

KAEDCO's capital investment was only N2.48 billion, while the capital requirement was N24.51 billion. Customer metering within the company's coverage area was below 36%. The commission has appointed an interim management board to run the company for six months and tasked Afreximbank with finding a core investor within 12 months.

KAEDCO emerged from the unbundling of Power Holding Company of Nigeria (PHCN) and was privatized in 2014. The company faced issues such as energy theft, inadequate metering, and customer payment apathy. NERC's intervention is the second of its kind, with the first occurring in 2024 when the company had a debt of over N110 billion.

The dissolution of KAEDCO is the latest in a series of regulatory actions taken against Discos in the country due to similar issues. The recurring crisis highlights the fundamental problems with the manner in which these companies were conceived and operated, with many lacking the capital and technical capacity required to meet their objectives.

The problems in Nigeria's power sector are systemic, running from generation to transmission and distribution. The government is recommended to holistically review the 2005 power sector reforms to identify structural defects and apply necessary corrections. It is also recommended to engage partners with proven technical capacity, experience, and capital to participate in Nigeria's power sector.