UBA Takes over AEDC  over Failure of KANN Consortium to Service Debt

Nigeria Electricity Regulatory Commission (NERC) and the Bureau of Public Enterprises (BPE) have approved the takeover of Abuja Electricity Distribution Company (AEDC) by the United Bank for Africa (UBA).

This followed the failure of KANN Consortium, the majority owners, to service their debt.

Abubakar Aliyu, minister of power, said this in a statement while reacting to reports regarding the change in the AEDC management structure, which he claimed were out of context.

Clarifying the federal government’s role, Aliyu said the electricity distribution company had been faced with operational challenges arising from a dispute between KANN Consortium, a core investor with 60 percent equity in AEDC, and UBA which lent the fund for the acquisition of the majority shareholding of the disco.

On Tuesday, the ministry of power said President Muhammadu Buhari approved the sack of AEDC management over the strike by the Nigerian Union of Electricity Employees (NUEE).

“The presidential directives as conveyed also directed the Bureau of Public Enterprises to set up a new management team of the AEDC,” Ofem Uket, media aide of the minister of state for power, had said in a statement.

“In a memorandum of understanding MOU, jointly signed by the minister of state power Goddy Jedy Agba, the chairman, Nigeria Electricity Regulatory Commission NERC, Sanusi Garba, director-general, Bureau of Public Enterprises, Alex Okoli, comrade Joe Ajaero on behalf of the union, the federal government ordered the suspension of the strike [and asked to] given 21 days within which the outstanding emoluments and entitlements of staff will be paid.”

In another joint statement on Wednesday, Sanusi Garba, NERC chairman, and Alex Okoh, BPE director-general, said the decision to fire the management of the AEDC was taken by United Bank for Africa (UBA) Plc and approved by the government as the regulator.

“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 statement reads.

“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.”

Speaking on the genesis of the workers’ strike, NERC and BPE said there has been an ongoing dispute amongst competing factions of AEDC’s majority shareholder/core investor KANN Utility Company Limited (KANN).

KANN owns a 60 percent stake in AEDC, while the federal government controls 40 percent shares of the firm.

They said the dispute eventually spilled over to a dispute with UBA Plc, 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 Nigerian Union of Electricity Employees (“NUEE”),” the statement added.

“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 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.”