The Nigerian Electricity Regulatory Commission (NERC) has dissolved the board of directors of Kaduna Electricity Distribution Plc (KAEDC) and appointed an interim board as part of a sweeping regulatory intervention to rescue the troubled electricity distribution company.
The intervention, contained in Order No. NERC/2026/086, took effect on August 10, 2026, and was made pursuant to Sections 75–79 of the Electricity Act 2023.
NERC said the decision followed an extensive inquiry into KAEDC’s financial, operational and governance conditions, which it described as “grave,” citing prolonged regulatory and market defaults, inadequate investment, weak commercial performance, high electricity losses and insufficient assets relative to liabilities.
According to the Commission, KAEDC’s cumulative market obligations had risen to approximately N456.5 billion as of May 2026.
The figure comprises about N415.5 billion owed to the Nigerian Bulk Electricity Trading Plc (NBET) and N41 billion owed to the Nigerian Independent System Operator (NISO).
The DisCo also has additional non-market statutory and third-party obligations estimated at N14.26 billion.
NERC said the situation deteriorated further after ASI Engineering Limited (ASI) assumed operational control of KAEDC in June 2024, with the company accumulating an additional N118.6 billion in market debt by May 2026.
The regulator said ASI and KAEDC repeatedly failed to provide acceptable payment bank guarantees required under their vesting contract and the Market Rules of the Nigerian Electricity Supply Industry.
It also said the core investor had failed to present a credible payment plan for the outstanding liabilities.
71.88% electricity losses
NERC identified KAEDC’s exceptionally high Aggregate Technical, Commercial and Collection (ATC&C) losses as one of the major factors behind its financial difficulties.
The Commission said KAEDC recorded 71.88 per cent ATC&C losses in 2025, meaning the company was only able to account for approximately 28.2 per cent of the electricity received and delivered to its customers.
Its market remittance performance was also described as poor.
In 2025, KAEDC paid only 41.93 per cent of its adjusted market invoices, resulting in a market shortfall of approximately N46.71 billion.
The company collected N51.39 billion against adjusted market invoices of N80.44 billion, while only N33.73 billion was remitted, according to NERC.
The regulator further disclosed that KAEDC’s monthly remittance performance fluctuated between 32.11 per cent and 59.92 per cent during 2025.
Poor investment, low metering
NERC also faulted ASI for failing to meet its capital investment commitments.
The Commission said KAEDC’s actual capital expenditure in 2025 was approximately N2.48 billion, against a minimum capital expenditure requirement of N24.51 billion.
This represented only about 10 per cent CAPEX performance, with NERC noting that the expenditure was achieved following regulatory derogations and forbearances.
Meter deployment also remained significantly below expectations.
According to the Order, KAEDC’s metering coverage remained between 33.26 per cent and 35.54 per cent since ASI took over operations.
NERC said the low metering rate, combined with weak collections and high losses, continued to undermine the company’s financial and operational performance.
N53.79bn government intervention
The regulator said KAEDC’s deterioration persisted despite substantial government and regulatory interventions.
Approximately N6.58 billion in regulatory derogations had been granted to the company between January 2024 and May 2026.
In addition, aggregate Federal Government intervention disbursements to KAEDC since July 2018 amounted to approximately N53.79 billion.
NERC said the continued underperformance posed significant risks to electricity consumers, creditors, market stability and the continuity of electricity supply.
The Commission also said KAEDC’s board had failed to present a credible, funded and measurable recovery plan capable of addressing the company’s capital requirements, operational inefficiencies and market obligations.
24-month extension rejected
The regulator said it had given ASI and other stakeholders opportunities to resolve the situation before resorting to intervention.
Following a notification of imminent regulatory intervention, representatives of ASI, NERC, the Bureau of Public Enterprises (BPE), Afreximbank and Fidelity Bank met in June 2026 to discuss possible measures to rescue KAEDC.
At the meeting on June 11, the parties acknowledged that ASI had not complied with conditions attached to its acquisition of a 60 per cent majority stake in KAEDC and had also failed to satisfy outstanding BPE requirements for finalising the shareholding arrangements.
ASI subsequently requested an extension of up to 24 months to stabilise KAEDC’s cash flow, undertake critical investments and improve its operational performance.
NERC, BPE and Afreximbank rejected the request, saying another two-year extension was not justifiable given that ASI had already been in effective control of the company since June 2024 without achieving the promised turnaround.
The Commission said ASI had also failed to provide a credible plan supporting its request for the additional 24 months.
Interim board appointed
Under the new order, NERC dissolved KAEDC’s existing board and removed all its directors from office.
The Commission appointed a seven-member interim board of special directors headed by Dr. Abdullahi Garba as Chairman.
Other members are Engr. Francis U. Agoha, Mr. Aliyu E. Aliyu, retired Major General Henry E. Ayamasaowei, Dr. Haliru Dikko, Dr. Ayodeji A. Gbeleyi, representing BPE, and Dr. Abubakar Umar Hashidu.
Dr. Hashidu, who is the incumbent Managing Director/Chief Executive Officer, was also appointed Administrator for an initial six-month term, subject to NERC’s review.
The Administrator is expected to oversee KAEDC’s day-to-day operations, implement the interim board’s resolutions, comply with NERC directives, safeguard company assets and records, and ensure continuity of electricity distribution services.
Management approvals withdrawn
NERC also withdrew the Know-Your-Licensee (KYL) approvals issued to all members of KAEDC’s management team.
Affected management personnel have been directed to submit themselves for KYL revalidation by the Commission.
During the transition period, KAEDC will also require prior written approval from both the interim board and NERC before undertaking major borrowing, disposing of or encumbering significant assets, entering related-party transactions, altering senior management remuneration or capital structure, compromising material claims or making commitments outside an approved transition budget.
12-month search for new investor
A major component of the intervention is the search for a new core investor to take over KAEDC.
NERC directed Afreximbank, in coordination with the Commission, to lead an open and competitive process for selecting a replacement core investor.
The process is expected to be completed within 12 months, unless NERC grants a written extension.
Prospective investors must demonstrate adequate working capital, transparent beneficial ownership, technical capacity to turn around a failing electricity utility and credible backing from leading financial institutions.
They must also submit a credible five-year business plan covering service improvement, metering, network investment, loss reduction, market remittance, legacy liabilities and acquisition debt.
The preferred investor will be required to provide cash-backed funding for the first two years of the approved five-year infrastructure and capital expenditure programme, as well as a Tier-1 bank performance bond covering the remaining three years.
The investor must also provide cash-backed one-year working capital, excluding energy costs, and Tier-1 bank guarantees to NBET and NISO covering at least three months of market invoices.
60-day stabilisation plan
NERC has given the Administrator 60 days from the commencement of the Order to submit a costed 12-month stabilisation plan.
The plan must address cash-flow controls, market remittances, revenue collection, metering, energy accounting, loss reduction, service reliability, safety, customer complaints, capital expenditure, procurement, staff obligations and legacy liabilities.
The plan is also required to contain monthly milestones, responsible officers, funding sources and measurable performance targets.
KAEDC’s liabilities will meanwhile be reconciled by the Administrator, BPE, NBET, NISO and other major creditors, with a liability-management plan to be submitted to NERC within 90 days.
NERC pledges consumer protection
NERC said the intervention was designed primarily to preserve KAEDC as a going concern, protect consumers and maintain uninterrupted electricity distribution to the extent technically possible.
The Commission directed KAEDC to comply with applicable service-quality and consumer-protection standards, protect vulnerable customers, maintain effective complaint-handling mechanisms and issue timely public notices on major service, governance and transaction developments.
The Commission said the intervention would remain in force until amended or revoked, with the special transition period continuing until the transfer of KAEDC to an approved replacement core investor or further regulatory action by NERC.
NERC warned that if the condition of the company fails to improve after intervention, it could exercise its powers under the Electricity Act to revoke the distribution licence and initiate the sale of the undertaking in accordance with the law.