The privately-run company supplies electricity to Abuja, Kogi, Nasarawa, and Niger States.

As one of Nigeria’s 11 electricity distribution companies, AEDC emerged from the 2013 privatisation of the sector. KANN is a major investor which holds 60 per cent of its shares. The federal government holds the remaining 40 per cent.

The government’s announcement of the management’s suspension sparked criticisms, forcing authorities to walk back its message.

The former chairman of the Nigerian Electricity Regulatory Commission, Sam Amadi, in this interview with PREMIUM TIMES’ Oge Udegbunam, explained why the government lacks the capacity to sack the board management of AEDC.

PT: The government sacked the board members of AEDC, a private firm, after the workers went on strike. Why did the government take such action?

Mr Amadi: Often times, people advise the government that it ( the government) always has the right to step in and to interfere or to get into the markets and intervene in market transactions for the greater good of the public, but they fail to advise the government on how best they can do that.

So the government has the impression that it can always take any action it wants to promote public interest. Of course, first, the government thinks it has interest as a stakeholder in the DISCOs, but it is minority stakeholder. And so what that means is that the government does not have overriding power to change board policy or composition, but government can use its presence on the board to try to influence the board over policies or to remove any or all the directors, which is usually part of corporate politics. This is government acting as a shareholder engaged in corporate politics.

Two ways board and management can be sacked in the manner government did are: through corporate politics or through regulatory action by the regulator after due process. Corporate politics may result in the shareholders sacking a delinquent director or the entire board and management.

The second way it can cause this kind of change in the electricity company is through regulatory action. Because AEDC is a regulated asset, the government cannot change it leadership through presidential action. This is the meaning of being a private company that is regulated. This is irrespective of the fact that government is a shareholder in the company. So when we say a company is regulated, it means that the company is now not just, you know, playing according to corporate code of conduct, including, you know, agreements with shareholders, including regulations and other laws or standards set by corporate regulators like the Corporate Affairs Commission as well as laws like the Company and Align matters Act. But beyond that, that company faces a regulator who issues conditions, terms of licence or rules of engagement.

So if as it looks like in this case, the board has become, you know, dysfunctional and in disarray, has become this disorderly, totally confused and almost, you know, unworkable, it is the work of the regulator to step in. Because the regulator has corporate and other regulations that stipulate what should be done in such circumstances and these rules are peer-reviewed, it is lawful and orderly to take such action as sacking a member of the board, or dissolving the entire board or sacking both the board and the management. The president has no such power.

So even if the federal government has a 40 per cent minority share in the assets, those shares are held for it by the Bureau Public Enterprises that has a position on the board. So the best we can do is to use the board membership to push policies to change behaviour, to remove those who should be removed. The president can no longer exercise the power because it’s part of a member of the corporation, to sack the board to preserve order.

This is a problem of misconceiving what the electricity market is, this is not like NEPA where the board can be sacked by the minister with the president’s approval. PHCN has become private companies and the fact that Nigeria owns shares in them doesn’t change the fact that they are private companies.

And the fact that the federal government has the power of a sovereign doesn’t change the fact that the only way you can protect public interest in the sector is through the regulator. Any other action will appear like nationalising back those assets. So it will lead to loss of credibility as this can be seen as an effort by the government to take political action in a corporate setting. Maybe they act as if these are companies that are public corporations are not private companies.

PT: What’s your assessment of the crisis at AEDC?

Mr Amadi: There is crisis in a board, clearly in the middle of it are workers who went on strike because they have issues that they’re fighting, issues like non-payment of salaries at the moment. But these are not issues that trigger federal government action at the level of presidential order. These are actions that can either go to the normal court, go to industrial arbitration, to the industrial court or even to ministerial arbitration.

So if there’s a problem between a company in Nigeria and its workers, it’s usually the regulator that intervenes. Let’s say a bank’s workers are fighting with the management over employment or the welfare of the staff. The usual thing is for this to be settled amicably or they go on strike or either petition the court or the regulator. The central bank in this case may be forced to step in.

If those actions of the management become criminal or even violative of basic rules of performance in the sector, that entitles the regulator to go through the process and fire the delinquent management or dissolve the board just like the central bank did recently. I think the First Bank also had a board of directors removed and a replacement appointed by the apex bank.

So that’s the work of the regulator, not the government. So, basically, I think the federal government has not internalised the fact that this is now a private market largely except a section of the market, TCN, where it has a public company. They do not have step-on rights in any other company except through the regulator and for clearly defined violations, after due process based on clear violation of operating codes.