FG Clarifies Takeover Of AEDC By UBA

Uba

The Federal Government on Wednes­day explained how United Bank for Africa (UBA) Plc took over the board and management of Abuja Electricity Distribution Company (AEDC), say­ing there had been ongoing dispute be­tween the core investors, KANN Utility Company Limited (KANN) and UBA over the former’s inability to service its debt to the bank.

In a joint statement of the Nigeri­an Electricity Regulatory Commission (NERC) and Bureau of Public Enter­ prises (BPE), the agencies of the Federal Government explained that the dispute eventually spilled over to a disagreement with UBA, the lender that provided the ac­quisition loan to KANN for the acquisition of majority shares during the privatisa­tion exercise in 2013, over KANN’s inability to service its debt to the bank.

According to the state­ment, the narratives that trended in the media space on Tuesday, stating that the Fed­eral Government had sacked the management of AEDC was misrepresentations of facts and circumstances lead­ing to the change in the com­position of the AEDC board.

The attention of the Ni­gerian Electricity Regulato­ry Commission (NERC) and Bureau of Public Enterprises (BPE) has been drawn to mis­representations in the press on the facts/circumstances leading to the change in the composition of the board of Abuja Electricity Distribution Company Plc or the ‘DisCo’, the licensed utility that serves end-use customers in Kogi, Nasarawa, Niger and the Fed­eral Capital Territory (FCT).

“The general public may wish to note that there has been an ongoing dispute amongst competing factions of AEDC’s majority share­holder/core investor, i.e KANN Utility Company Lim­ited (KANN), and this dispute eventually spilled over to a dispute with the lender that provided the acquisition loan to KANN for the acquisition of majority shares during the privatisation exercise in 2013, over KANN s inability to service its debt to the bank.

“During the course of the intractable crisis, AEDC not only struggled to meet its ob­ligations to the market under the terms and conditions of its licence but was also unable to meet its obligations to key stakeholders in the organi­sation including staff culmi­nating in the industrial action by members of the National Union of Electricity Employ­ees (NUEE).

“Eventually this resulted in a total service disruption on 6th December 2021 for over 14 hours in AEDC’s net­work area. The provision of electricity supply in AEDC’s network area was only re­stored after the intervention of the Hon. Minister of Power, NERC and BPE following an agreement with the union on the terms for the suspension of the industrial action on 6th December 2021.

“The general public should note that arising from KANN’s inability to service its acquisition loan and the ensu­ing dispute over the servicing of the loan from UBA Plc, the lender exercised its rights by appointing a receiver/man­ager over KANN. Stakehold­ers including NERC, Central Bank of Nigeria (CBN) and BPE had on several times worked to broker an ami­cable resolution between the contending parties. The protracted resolution of the dispute exacerbated the state of affairs at AEDC resulting in an industrial action and a total blackout in the service area for over 14 hours.

It then became apparent that decisive steps were re­quired to address the matter and BPE agreed with the lender’s request to exercise its powers as receiver/manager over KANN by exercising its powers over the 60% equity in AEDC as a means to recover­ing the acquisition loan grant­ed by the bank.

“The action to appoint an interim team to manage AEDC was not done on the basis of a directive from the Federal Government as being falsely reported in the press but on the basis of legal pro­cesses arising from the failure of the core investor in AEDC to meet its obligations to a lender.

“The receiver/manager has agreed to the appointment of an interim management team in conjunction with BPE as part of measures designed to address business failure events and ensure continuity of service to end-use custom­ers in the service area.

“The Federal Government remains committed to the ongoing initiatives on the re­covery of the electricity sector but private investors should remain cognisant of their fiduciary responsibilities to their stakeholders, especial­ly in regulated utilities and should not act in a manner that jeopardizes public inter­est.

“NERC and BPE shall con­tinue to work constructively with key stakeholders in the power sector to ensure con­tinued growth and service im­provement under the reforms being embarked upon by the Federal Government for the socioeconomic growth of our great nation”, read the state­ment in parts.

Share This:
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

Recommended For You

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Open