Privatisation Woes: UBA Takes Over Ownership Of AEDC Over N20bn Loan Default

The Federal Government has approved the take-over of the majority shares of Abuja Electric Distribution Company by the United Bank for Africa over the inability of the company to service the N20bn loan taken from the bank during the
privatisation process in 2013

The development was confirmed by the Minister of Power, Abubakar Aliyu, in a statement issued in Abuja.

The AEDC is the licensed utility that serves end-use electricity customers in Kogi, Nasarawa, Niger states and the Federal Capital Territory.

There had been an ongoing dispute among competing factions of the AEDC’s majority shareholder/core investor Kann Utility Company Limited.

This dispute had spilled over to a major crisis which made UBA to provide 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.

The development culminated in the industrial action by members of the Nigerian Union of Electricity Employees which resulted in a total service disruption on December 6, 2021 for over 14 hours in the AEDC’s network area.

Speaking on the crisis, 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 what led to the recent changes in the ownership structure and management at the AEDC, the power minister in the statement he signed said the takeover of the Disco by the bank was inevitable.

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.

‘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 action to appoint an interim team to manage the AEDC was not done on the basis of a directive from the Federal Government 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.