Confusion dogs sale of Kano Disco

There is confusion over who will take charge of the Kano Distribution company (KEDCO) after the resell of the 60 percent shares to the company to new owners.

According to sources, the federal government has approved the sale of the company to Future Energies Africa (FEA) Limited but the Nigerian Electricity Regulatory Commission in an advertorial said it received a No Objection for the sale of the company to Powercom Smart grid Nigeria Limited (PSGN).

The development led to FEA to approach the Federal High Court in Lagos who issued an injunction restraining the Defendants following – Nigerian Electricity Regulatory Commission, the Bureau of Public Enterprises, Sahelian Power SPV Limited (in Receivership), Patrick J.N. Ikwueto SAN (in his capacity as receiver manager of Sahelian Power), Fidelity Bank, Kano Electricity Distribution Company Plc. and Powercom Smartgrid Nigeria Limited from considering, accepting, approving, or naming Powercom or any other investor as a new core shareholder in Kano Electricity Distribution Company or conducting or recognizing any other bidding process for the sale of  Sahelian’s 60% shares in the Kano Electricity Distribution Company.

FEA says it has already acquired the Disco after it emerged winner of a bidding process conducted by Fidelity Bank and was issued a ‘No Objection’ certificate by the BPE.

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Recall that the federal government through the BPE announced the takeover of the Kano Disco and two other non-performing distribution companies by Fidelity Bank over investors’ poor financial performance.

On July 19th, the National Electricity Regulatory Commission (NERC) stated in an advertorial that it had received a request for ‘No Objection’ from the receiver manager appointed by Fidelity Bank for the acquisition of 60% equity holding in KEDCO by Powercom Smart Grid Nigeria Limited.

But Future EnergiesEA through its representative Engr. Adam Ibrahim said in a meeting with journalists over the weekend that “Powercom is not the rightful owner of KEDCO because FEA had already signed a legally binding agreement to purchase the shares as far back as 25 May 2023.”

“We went through the process, and we sent in an expression of interest. Fidelity and its Receiver Manager looked at our bid alongside other parties that were interested in the asset and they sent us forward to BPE and NERC, “Engr. Ibrahim said at the meeting.

“There was a receiver manager that was appointed by Fidelity to oversee the sale of the 60% shares in Kano Disco. BPE connected FEA to Fidelity through its receiver manager.

“In the last 12 months there have been a lot of meetings, communications, document exchanges for us to get to the point where we were approved by both Fidelity Bank and the BPE for our consortium of local and international players to take over the asset.”

“After a long process and comparing evaluation of us to and other partiesbidders, we emerged successful and signed a Share Sale and Purchase Agreement with Fidelity Bank through its appointed receiver manager over Sahelian and it’s the 60 per cent stakerepresentatives. We also received a ‘No Objection’ from the BPE (after Fidelity Bank communicated to BPE).”

The company said they were in the process of negotiating the Shareholders’ Agreement with the BPE when Fidelity Bank reportedly asked the Bureau to halt the process.

Second bid

Following the decision to halt FEA’s Future Energies’ process of finalising its ownership of KEDCO, the bid for the Disco was restarted by Fidelity Bank.

“They hired PwC to oversee a sham process because they wanted other parties that were interested before and didn’t make the cut to participate again. We were never informed of a new competitive process and were asked to resubmit our documents.

“We later found out that another company Powercom was announced by PwC as the preferred bidder, despite us having a legally binding agreement, which Fidelity Bank, BPE, and NERC were aware of.”

Having met a brick wall with BPE (who insisted on following due process), Fidelity Bank decided to go to NERC, the regulator, and obtained the certificate “to force everyone’s hands,” the FEA Future Energies’ official said. The ‘No Objection’ was issued despite a complaint letter sent to NERC by FEA Future Energies that was never responded to by NERC.

“Based on the ‘No Objection’ they received from NERC, Powercom decided to issue an announcement that they have successfully acquired Kano Disco. We had no further option but to take this to the legal authorities exercise our legal rights in court to protect our rights and the time and investment that has gone into this process, it’s very unfortunate for the Nigerian Electricity sector that due process cannot be adhered to and valid and binding contracts can just be thrown into the dustbin. We will continue to insist on the sanctity of a legally binding contract that we entered into.”