In a rather amusing turn of events, the Kaduna State Internal Revenue Service (KADIRS) has announced the sealing of the Kaduna Electricity Company Plc (Kaduna Electric) office due to unpaid taxes amounting to N600 million.
The announcement, made on the service’s X page on Friday, August 2, 2024, highlighted the enforcement of tax compliance as per Section 104 (1) & (4) of the Personal Income Tax Act, 2011, and Section 37 (3) & (4) of the Kaduna State Tax Codification and Consolidation Law, 2020.
Zakari Jamilu Muhammad, Head of Corporate Communications for KADIRS, explained that the sealing of Kaduna Electric’s business premises was conducted based on a court order.
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“The Service secured a court order for the immediate closure and taking over of the company’s property until all unpaid taxes are settled,” Muhammad stated.
The Dramatic Response from Kaduna Electric
In an unexpected twist, the Kaduna Electricity Distribution Company (KEDCO) retaliated by disconnecting the electricity supply to the Kaduna Government House over an outstanding debt of N2.9 billion. According to Abdulazeez Abdullahi, KEDCO’s Head of Corporate Communication, the government house had not paid for electricity consumed over the past seven months.
Abdullahi revealed that extensive efforts to resolve the issue through consultations and reconciliations were unsuccessful, leading to the disconnection.
“The outstanding balance for electricity consumed from January 2024 to July 2024 alone amounts to a staggering N1.166 billion. Including historical debt, the State Government’s total outstanding debt stands at N2.943 billion,” Abdullahi noted.
Despite a payment of N256 million made on May 9, 2024, for electricity consumed between September 2023 and December 2023, the state’s debt remains substantially high. KEDCO explained that the decision to disconnect power was a last resort after all other avenues had been exhausted.
The disconnect notice was formally issued on July 21, 2024, and received by the Office of the Governor on July 22, 2024. This move underscores the company’s need to meet its financial obligations amidst broader challenges in the electricity sector.
Other states under the Kaduna Electric franchise, including Sokoto, Kebbi, and Zamfara, have maintained good standing with their accounts and regularly meet their electricity payment obligations, according to the DisCo.
The development follows the financial troubles of Kaduna Electric, which has made it insolvent. On July 13, the Nigerian Electricity Regulatory Commission (NERC) approved the acquisition of a 60% equity stake in Kaduna Electric by ASI Engineering Limited.
NERC had six months earlier, revealed in a report that the electricity distribution company had a debt of N110 billion ($130 million) owed to various entities, including the Nigerian Bulk Electricity Trader and power generation firms.
The regulator had previously intervened by installing an Administrator and Special Board to oversee Kaduna Electric during its transitional period before the current investors’ official takeover. The Administrator committed to an agreement with KADIRS to pay N20 million monthly, including statutory monthly tax payments, which has been honored since the current management took over.
Also, the Kaduna State government is looking for funds to execute projects, after revealing that former governor Nasir El-Rufai left a staggering debt of $587m and N85bn for the state.
This drama marks a critical juncture in the ongoing tensions between utility providers and state governments, reflecting broader challenges in Nigeria’s electricity sector. DisCos are being owed huge amounts of money by several state governments, even though many of the electricity distributors are struggling to stay afloat.
Against this backdrop, the public and stakeholders are keen to see how the parties will resolve the matter. Many have suggested that Kaduna Electric should subtract
However, the irony of the situation is hard to miss: a state government sealing off an electricity company’s office for unpaid taxes, only to have its own government house disconnected from the power supply for unpaid electricity bills. It’s a comedy of errors that has kept many giggling amid Nigeria’s biting social-economic challenges.