YEDC At Risk Of Bankruptcy Over Insurgency
One of the nation’s power distribution companies, Yola Electricity Distribution Company (YEDC), has said a significant change to the commercial environment will be required to avoid bankruptcy.
The Disco stated this in its performance improvement plans and applications for extraordinary tariff review of the Multi-Year Tariff Order 2015 submitted to the Nigerian Electricity Regulatory Commission.
“The security situation in the Yola franchise area has, to date, made achievement of the business plan impossible. The insurgency has made it impossible to issue bills and collect payments in the affected business units,” it said.
YEDC was handed over to Integrated Energy Distribution and Marketing Limited in November 1, 2013 following the privatisation of the distribution and generation companies carved out of the defunct Power Holding Company of Nigeria.
In July 2015, the Federal Government took over the power firm following the exit of the core investor after it declared a force majeure, citing insecurity in the North-East region of the country.
The company told NERC in its performance improvement plans that IEDM wrote to the Bureau of Public Enterprises on November 12, 2013 on the security situation in the northern areas of its franchise zone and the challenges this would present in meeting the requirements of the performance agreement.
It said, “Since that letter, the insurgency has increased significantly making parts of the franchise area a ‘no go’ zone for the YEDC staff. Areas of the network have been damaged, and will require capital expenditure to recover even to the level of assets at handover.
“Completely disconnecting the affected units was not practical course of action. First, continuing power supplies to the affected regions were requested to allow the military bases to continue to function. Second, the YEDC has an obligation to supply to our customers and reducing the supply of power will aggravate the challenges they have to face.”
It said once it became clear that the losses were set to continue indefinitely, the IEDM declared political force majeure under the performance agreement and exercised the put option.
“They also suggested a number of potential actions to mitigate the impact and allow the management of the YEDC to continue. The long-term solution has not yet been resolved. In the meantime, the management team in the YEDC has remained and continued to maintain as much stability as is possible under the difficult circumstances,” it added.
