Aliyu said the Deposit Money Bank had to take over the power firm due to the inability of the AEDC’s major investor (Kann Consortium) to effectively service the loans obtained from UBA when it acquired the Disco in 2013.
UBA had acted as the mandated lead arranger, underwriting $122m (about N20bn then) for Kann Consortium’s acquisition of the AEDC.
Providing explanations on Wednesday on what led to the recent changes in the ownership structure and management at the AEDC, the power minister in a statement he signed said the takeover of the Disco by the bank had to happen.
He said, “The AEDC has, of recent, been facing significant operational challenges arising from a dispute between the core investors (KANN Consortium) as owners of 60 per cent equity in the AEDC and UBA as lenders for the acquisition for the majority shareholding in the public utility.
“The situation has currently deteriorated due to lack of access to intervention finances leading to a point whereby legitimate entitlements of the staff are being owed thus leading to service disruptions on December 6, 2021 within its franchise area.
“The Federal Ministry of Power has since taken the initiative to engage organised labour and electricity service has since been restored in the Federal Capital Territory and the states served by the AEDC.”
Aliyu added, “The UBA, as a lender, and in exercising its rights over the shares of KANN Consortium in the AEDC, has taken over the shares of the obligor in the AEDC. This takeover of the majority stake in the AEDC by UBA has consequently led to the reported changes in the management of the AEDC.”
He said the changes in shareholding in the AEDC and the appointment of an interim management for the Disco by the shareholders had been endorsed by the Nigerian Electricity Regulatory Commission and the Bureau of Public Enterprises (as co-shareholders in the AEDC).
The AEDC is the licensed utility that serves end-use electricity customers in Kogi, Nasarawa, Niger states and the Federal Capital Territory.
Also the NERC and BPE in a joint statement said there had been an ongoing dispute among competing factions of the AEDC’s majority shareholder/core investor Kann Utility Company Limited.
They said this dispute eventually spilled over to a dispute with the lender that provided the acquisition loan to Kann for the acquisition of majority shares during the privatisation exercise in 2013
“During the course of the intractable crisis, the 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,” they stated.
The agencies added, “Eventually, this resulted in a total service disruption on December 6, 2021 for over 14 hours in the AEDC’s network area.”
The statement stated that Kann’s inability to service its acquisition loan and the ensuing dispute over the servicing of the loan from UBA made the lender to exercise its rights by appointing a receiver/manager over Kann.
It stated that stakeholders including the NERC, Central Bank of Nigeria and the BPE had on several times worked to broker an amicable resolution between the contending parties.
The agencies said it became apparent that decisive steps were required to address the matter and the BPE agreed with the lender’s request to exercise its powers as receiver/manager over Kann.
This was by exercising its powers over the 60 per cent equity in the AEDC as a means to recovering the acquisition loan granted by the bank.
“The action to appoint an interim team to manage the 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 the AEDC to meet its obligations to a lender,” the statement added.
It stated that the receiver/manager had agreed to the appointment of an interim management team in conjunction with the BPE as part of measures designed to address business failure events and ensure continuity of service to end-use customers in the service area.
“The Federal Government remains committed to the ongoing initiatives on the recovery of the electricity sector but private investors should remain cognisant of their fiduciary responsibilities to their stakeholders especially in regulated utilities and should not act in a manner that jeopardises public interest,” it stated.
