The Nigerian Electricity Regulatory Commission (NERC) has dissolved the board of Kaduna Electricity Distribution Plc (KAEDC), citing prolonged regulatory and market defaults, inadequate investment and severe financial and operational weaknesses.

The Commission, in an Order dated August 10, 2026, also appointed an interim board, retained the incumbent Managing Director/Chief Executive Officer, Dr. Abubakar Umar Hashidu, as Administrator for an initial six months and commenced a supervised process to secure a replacement core investor for the electricity distribution company.

NERC said its inquiry found that KAEDC was in a “grave situation characterised by prolonged regulatory and market default, inadequate investment, weak operational and commercial performance, insufficient assets relative to liabilities, and inability to present a credible pathway to sustainable recovery.”

The intervention followed the failure of Africa Smart Investment (ASI), which assumed effective operational control of KAEDC in June 2024, to fulfil key conditions attached to its acquisition of a 60 per cent majority shareholding in the DisCo.

According to the Commission, ASI failed to demonstrate the required turnaround in capital injection, loss reduction, metering deployment, market securitisation and operational performance.

NERC said KAEDC had also accumulated approximately N456.5 billion in cumulative market obligations as of May 2026, comprising N415.5 billion owed to the Nigerian Bulk Electricity Trading Plc (NBET) and N41 billion to the Nigerian Independent System Operator (NISO).

It added that the company had accrued other non-market statutory and third-party obligations of approximately N14.26 billion.

Since ASI took operational control in June 2024, KAEDC accumulated additional market debt of more than N118.6 billion as of May 2026, while the company and its core investor repeatedly failed to provide acceptable payment bank guarantees to NBET and NISO.

NERC said KAEDC paid only 41.93 per cent of adjusted market invoices in 2025, resulting in a market shortfall of approximately N46.71 billion.

The Commission attributed the poor remittance performance largely to KAEDC’s high Aggregate Technical, Commercial and Collection (ATC&C) losses, which stood at 71.88 per cent in 2025.

“This means that in 2025 review period, KAEDC was only able to account for only 28.2 per cent of the energy received and delivered to end-use customers,” NERC said.

The DisCo’s metering performance also remained weak, with meter coverage standing at 34.42 per cent at the end of 2025.

Its 2025 billing efficiency was 61.56 per cent, while collection efficiency stood at 46.69 per cent.
NERC further said ASI had failed to meet its capital expenditure obligations.

In 2025, actual capital expenditure by KAEDC was approximately N2.48 billion, against a minimum capital expenditure provision of N24.51 billion, representing only 10 per cent performance.

The Commission said the company’s deterioration persisted despite significant regulatory and government interventions.

It disclosed that approximately N86.58 billion in regulatory derogations was granted to KAEDC between January 2024 and May 2026, while aggregate Federal Government intervention disbursements since July 2018 stood at approximately N53.79 billion.

NERC said the continued underperformance “poses material risk to end-use customers, creditors, market stability and continuity of electricity service.”

It further determined that KAEDC’s commercial viability and continued participation in the electricity market “poses a systemic risk to NESI.”

The regulator said ASI had requested an extension of up to 24 months to stabilise KAEDC’s cash flow, prioritise critical investments and improve performance.

However, NERC, the Bureau of Public Enterprises (BPE) and Afreximbank rejected the request, citing the investor’s more than two years of effective control without corresponding improvement in the company’s financial and operational performance.

The Commission said the extension was “not justifiable in view of the continuing risk to end-use customers and the market.”

Consequently, NERC invoked its powers under Sections 75 to 79 of the Electricity Act 2023 to dissolve KAEDC’s board and preserve the company as a going concern while seeking a new investor.

The Commission said it had determined that KAEDC “has persistently demonstrated its inability to discharge material obligations; remains in prolonged default of obligations under the EA, its licence and regulatory instruments; has experienced governance conditions detrimental to stakeholders and the undertaking; and has insufficient assets relative to liabilities with material insolvency and receivership risk.”

Under the intervention, all existing directors of KAEDC have been removed from office.

NERC appointed seven special directors to constitute the interim board, with Dr. Abdullahi Garba as chairman and a representative of the Bureau of Public Enterprises among the members.

The incumbent Managing Director/Chief Executive Officer, Dr. Abubakar Umar Hashidu, has been appointed Administrator for an initial six-month term.

NERC said the Administrator would serve as chief executive of the undertaking “for continuity of service”, while managing its day-to-day operations, implementing interim board resolutions and Commission directives, and safeguarding the company’s assets and records.

The Commission has also withdrawn the Know-Your-Licensee (KYL) approvals issued to members of KAEDC’s management team, directing affected management staff to undergo revalidation.

Meanwhile, NERC has directed Afreximbank to lead an “openly competitive and transparent process” to secure a replacement core investor for KAEDC.

The process is expected to be completed within 12 months, subject to any written extension granted by the Commission.

NERC said prospective investors must demonstrate adequate working capital, transparent beneficial ownership, technical capacity to “turnaround a failing utility,” credible support from leading financial institutions and a credible five-year business plan.

The preferred investor will also be required to provide cash-backed funding for the first two years of the approved five-year investment programme, a Tier-1 bank performance bond for the remaining three years, one-year working capital and bank guarantees to NBET and NISO covering at least three months of market invoices.

The intervention also provides for reconciliation of KAEDC’s liabilities, with the Administrator, BPE, NBET, NISO and other material creditors required to submit a liability-management plan to NERC within 90 days.

The Commission said the intervention was aimed at halting KAEDC’s “pervasive failure and non-performance”, maintaining continuity and quality of electricity service, protecting end-use customers and restoring governance.

It also ordered KAEDC to maintain safe and uninterrupted electricity distribution “to the extent technically available” and comply with applicable quality-of-service and customer-protection standards during the transition.

The Administrator is required to submit a costed 12-month stabilisation plan within 60 days, covering cash-flow controls, market remittance, collections, metering, energy accounting, loss reduction, service reliability, safety, customer complaints, capital expenditure, procurement, staff obligations and legacy liabilities.