Story Highlights
- NERC has approved ASI Engineering Limited’s acquisition of a 60% equity stake in Kaduna Electricity Company (Kaduna Electric) due to its N110 billion debt.
- ASI aims to upgrade Kaduna Electric’s infrastructure and enhance energy access, reliability, and efficiency in Northern Nigeria.
- The acquisition aligns with government efforts to privatize electricity distribution companies to boost revenue and attract investment in Nigeria’s economy.
The Nigerian Electricity Regulatory Commission (NERC) has approved the acquisition of a 60% equity stake in Kaduna Electricity Company Pic (Kaduna Electric), by ASI Engineering Limited.
This was disclosed by Kaduna Electric via its X page on Friday, July 13, 2024.
The equity transaction came after NERC report showed, six months ago that the electricity distribution company had a debt of N110 billion ($130 million), owed to various entities, including the Nigerian Bulk Electricity Trader and power generation firms.
Equity stake means the percentage of shares(ownership) an investor holds in a company.
Transaction to upgrade Kaduna Disco
According to the statement, the acquisition marks a significant milestone for ASI Engineering Limited as it continues to expand its global footprint and contribute to the development of critical infrastructure in emerging markets.
It added that the acquisition of Kaduna Electric aligns with the party’s strategic vision to enhance energy access, reliability, and efficiency in Nigeria.
The statement partly reads, “ASI Engineering Limited (ASI) is pleased to announce the successful acquisition of a 60% equity stake in Kaduna Electricity Company Pic (Kaduna Electric), a prominent distribution company in Northern Nigeria.
“ASI is collaborating with stakeholders, especially the state governments within its franchise licence area, to create sustainable solutions that align with the region’s unique needs.
” These unique collaborations will attract the needed investments to upgrade and turn around electricity distribution in the Kaduna Electric franchise area.”
“The acquisition of 60% equity of Kaduna Electric, which NERC has approved, marks a new dawn in the turnaround and repositioning of Kaduna Electric.”
As disclosed in the statement, ASI’s vision is to make Kaduna Electric a national leader in electricity distribution, driving sustainable development and enhancing the quality of life through innovative and reliable solutions thereby impacting residents, businesses, and industries in its franchise states (Kaduna, Zamfara, Sokoto, and Kebbi).
The collaboration is expected to focus on modernizing the electricity distribution network, implementing innovative solutions for energy management, and fostering greater customer satisfaction and engagement.
“ASI Engineering Limited’s entry into the Nigerian Electricity Market currently is a testimony and demonstration of faith in the efficacy of the renewed hope agenda of His Excellency President Bola Ahmed Tinubu. ASI Engineering Limited is bringing new dynamic leadership to Kaduna Electric through a newly invigorated board and management with vast experience in utility turnaround,” the statement added.
More insights
NERC was appreciated for facilitating the approval alongside the Bureau of Public Enterprises (BPE).
The terms of the acquisition agreement include that ASI will prioritize investments in Kaduna disco infrastructure upgrades, employee training and development while embarking on community engagement initiatives to create lasting value for all stakeholders.
“We want to thank the Nigerian Electricity Regulatory Commission (NERC), the Bureau of Public Enterprises (BPE), the interim board and the Administrator of Kaduna Electric for their work so far at Kaduna Electricity Distribution Company, ” the statement added.
Backstory
Nairametrics previously reported that NERC saying state it will sell Kaduna Electric, the nation’s sixth-largest power distribution utility, due to mounting debt woes.
NERC is a federal government regulatory agency under whose purview, are all electricity distribution companies in Nigeria.
This decision comes less than two years after the company’s takeover by lenders failed to revamp its financial health and profitability.
Consequently, the regulator has deemed the company a ‘failing licensee’ and is invoking a recently passed law to dissolve its board.
Despite being Africa’s largest economy, Nigeria’s power sector has been grappling with a multitude of challenges.
The 11 power distribution companies in the country find it increasingly difficult to stay profitable due to capital deficiencies and the burden of sub-economic tariffs imposed by NERC.
In July 2022, African Export-Import Bank (Afreximbank) and local lender Fidelity Bank took over Kaduna Electric, but their efforts to rejuvenate its financial performance have faced significant challenges.
The BPE had previously announced plans to sell off the remaining 40% government stake in electricity distribution companies (discos) and four other assets in 2024.
This move aligns with the government’s strategy to generate revenue and reduce the fiscal burden while attracting increased investor participation in the economy.
The government’s drive to privatize assets in 2024 aims to generate N298.4 billion in revenue.
This approach seeks to tackle public debts while stimulating macroeconomic growth and optimizing investor engagement in the Nigerian economy, as highlighted by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun.
Kaduna Electric is one of the 18 successor companies formed after the privatization of the defunct Power Holding Company of Nigeria in 2013, operates in four northern states.