• Sets 12-month deadline for Afreximbank to secure new investor
• Jos, Yola, Ibadan, Kano, Enugu record high losses as all distributors miss targets

Amid an approximately N456.5 billion cumulative market obligations and persistent financial and operational failures, the Nigerian Electricity Regulatory Commission (NERC) has dissolved the board of Kaduna Electricity Distribution Company Plc (KAEDC) and commenced a process for a replacement core investor.

The NERC intervention comes as its latest performance data also show that all 11 distribution companies (DisCos) failed to meet their Aggregate Technical, Commercial and Collection (ATC&C) loss targets in the first quarter of 2026.

While KAEDC emerged as the worst performer, recording 69.66 per cent ATC&C losses in Q1 2026, Jos, Yola, Ibadan, Kano and Enugu also recorded losses above 40 per cent, underscoring the scale of the distribution-side challenge confronting the electricity market.

According to NERC’s intervention order dated August 10, KAEDC had 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), N41 billion to the Nigerian Independent System Operator (NISO), and approximately N14.26 billion in other non-market statutory and third-party obligations, separate from the market obligations.

The financial deterioration continued after Africa Smart Investment (ASI) assumed effective operational control of KAEDC in June 2024, according to NERC. It noted that KAEDC accumulated over N118.6 billion in additional market debt after ASI took operational control, as of May 2026, while the company and its core investor repeatedly failed to provide acceptable payment bank guarantees to NBET and NISO.

NERC further said KAEDC paid only 41.93 per cent of adjusted market invoices in 2025, resulting in a market shortfall of approximately N46.71 billion, and also attributed the poor remittance performance largely to KAEDC’s high ATC&C losses, which stood at 71.88 per cent in 2025.

“This means that in the 2025 review period, KAEDC was only able to account for 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, while its 2025 billing efficiency was 61.56 per cent, and collection efficiency stood at 46.69 per cent.

NERC also found that KAEDC failed to meet its capital expenditure obligations, stating that in 2025, the company’s actual capital expenditure was approximately N2.48 billion, representing only 10 per cent performance, against a minimum capital expenditure provision of N24.51 billion.

The commission disclosed that the deterioration persisted despite significant regulatory and government interventions, with approximately N86.58 billion in regulatory derogations granted to KAEDC between January 2024 and May 2026, while aggregate federal government intervention disbursements since July 2018 stood at approximately N53.79 billion.

According to NERC, 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 commission noted that the continued underperformance “poses material risk to end-use customers, creditors, market stability and continuity of electricity service,” while its poor level of commercial viability and continued participation in the electricity market “poses a systemic risk to NESI.”

The intervention followed a request by ASI for an extension of up to 24 months to stabilise KAEDC’s cash flow, prioritise critical investments and improve performance, which NERC, the Bureau of Public Enterprises (BPE) and Afreximbank rejected, with NERC saying the proposal was “not justifiable in view of the continuing risk to end-use customers and the market.”

Consequently, it 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 stated 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.”

In view of these, it removed all existing directors of the company and appointed seven special directors to constitute an interim board, a representative of BPE among the members, and Dr. Abdullahi Garba as chairman.

The incumbent Managing Director/Chief Executive Officer, Dr. Abubakar Hashidu, was appointed administrator for an initial six-month term, to serve as chief executive of the undertaking “for continuity of service,” while managing its day-to-day operations, implementing interim board resolutions and commission’s directives, and safeguarding the company’s assets and records.

However, the latest industry-wide performance figures indicate that the challenges exposed by the KAEDC intervention extend beyond Kaduna.

NERC’s Q1 2026 report showed that the 11 DisCos recorded a 37.44 per cent weighted average ATC&C loss, compared with a combined MYTO target of 16.92 per cent. All 11 DisCos failed to meet their respective Q1 ATC&C targets.

Kaduna recorded the highest ATC&C loss at 69.66 per cent, followed by Jos at 58 per cent and Yola at 56.36 per cent. Ibadan recorded 48.10 per cent, Kano 45.08 per cent and Enugu 42.71 per cent.

Also, Benin recorded 39.71 per cent, Port Harcourt 35.99 per cent, Abuja 31.92 per cent, Ikeja 24.59 per cent, and Eko 20.24 per cent. The Q1 figures show that though Kaduna’s losses were the highest, it was not alone in significantly missing its regulatory benchmark.

Collection performance also exposed substantial differences across the sector. KAEDC recorded 45.81 per cent collection efficiency in Q1 2026 – the lowest among the 11 DisCos. Jos recorded 58.41 per cent, Kano 62.76 per cent, and Enugu 70.49 per cent, compared with the sector-wide average of 78.95 per cent.

At the higher end, Ikeja recorded 90 per cent collection efficiency, Eko 89.64 per cent, and Benin 85.16 per cent. Also, market remittance performance similarly varied across the sector.

KAEDC remitted 46.44 per cent of its Q1 2026 DRO-adjusted NBET and Market Operator invoices, compared with 68.25 per cent for Jos, 83.63 per cent for Yola, 85.07 per cent for Kano, 93.43 per cent for Ibadan, and 99.47 per cent for Enugu.

Abuja, Benin, Eko, Ikeja, and Port Harcourt recorded 100 per cent remittance performance, while the aggregate remittance performance for all DisCos stood at 94.08 per cent.

Metering also remains a major divide among the distributors as NERC reported an overall metering rate of 59.13 per cent at the end of March 2026. Eko recorded 88.50 per cent, Ikeja 87.96 per cent, and Abuja 79.79 per cent.

At the lower end, Yola recorded 33.16 per cent, Jos 34.58 per cent, Kano 35.38 per cent, and Kaduna 36.43 per cent. The figures indicate that the weaknesses that triggered regulatory action against KAEDC – high losses, weak collections, inadequate metering, poor market remittances and insufficient investment – are also present to varying degrees across other distribution companies.

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.

NERC 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.