- Main Investor in Abuja Disco is Pulling Out Amid mounting Debt
KANN Utility Company Limited, the main investor in Abuja Electricity Distribution Company, is selling its 60 percent stake in the company amid rising financial obligations.
Since the privatisation of the power sector, Electricity Distribution Companies (DisCos) has struggled to repay loans used in financing their purchase. However, with the Nigerian Electricity Regulatory Commission (NERC) decision to start withdrawing the license of some of the companies for failing to remit more money, banks have intensified efforts to recover their loans.
Discos account for 5 percent of non-performing loans in some of Nigeria’s top lenders.
“The banks have a valid reason to be concerned,” said Chuks Nwani, an energy lawyer. “If the assets they financed are being threatened, it is only normal that they should worry.”
This was after Abuja Electric and other distributing companies failed with their petition for review of their remittance obligation. NERC had replied with a threat, telling them to either remit more or have their licenses canceled.
The uncertainty surrounding the future of the sector coupled with the inability of Discos to devise a solid repayment plan is forcing largely inexperienced investors to seek exit plan.
According to available information, Thomas Etuh, chairman of Unity Bank plc and TAK Group of Companies, is in the process of acquiring the 60 percent stake held by KANN.
Etuh founded TAK Agro & Chemicals Limited to provide agro iiputs for Nigerian farmers.
According to information on the company’s website, “The Company under his leadership has become ‘the Farmer’s choice’, and over the years acquired fertilizer blending plants across Nigeria, established a presence in Mali, and built a solid network of agro-dealers that would ensure that the product went from the production plant to the end user.”
“As a major fertilizer blending company with a combined capacity of almost one million tonnes, TAK was forefront in partnering with the Federal Government of Nigeria in driving its Growth Enhancement Support Scheme (GESS) programme.”
