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Electricity Tariff: NERC Appeals Judgment of Lagos Court

Channels Television  
Updated July 15, 2016

NERCThe Nigerian Electricity Regulatory Commission (NERC) has appealed against the judgement of a Federal High Court sitting in Lagos which declared as illegal the electricity tariff currently used in Nigeria by the 11 electricity distribution companies.

Acting Executive Secretary of the commission, Anthony Akan, described the ruling as a major setback on the progress made in the country’s electricity sector.

He added that while the commission respects the decision of the court, it would appeal the judgement because it represents a reversal of the commercial foundation on which power supply contracts in the sector were built.

Mr Akah said that the commission was dissatisfied with the judgement because it impinges on the ultimate destination of the power sector as a commercialized electricity market.

He explained, “The ultimate destination of a commercialized electricity market is to achieve stability and adequacy in the supply of electricity to satisfy the yearning of Nigerians for adequate, safe and reliable electricity supply.”

According to him, the multi-year tariff order which the judgement effected provides a long term path of determining in advance, what the tariff will look like and based on that a lot of improvement in the sector were recorded and are in progress.

The Judgment

Justice Mohammed Idris, who delivered judgment in a suit filed by a Lagos based lawyer, Mr. Toluwani Adebiyi, challenging the increment, described NERC’s action as irrational, irregular and illegal.

The court, while relying on Sections 31, 32 and 76 of the Electricity Power Sector Reform Act (EPSRA) 2005, in deciding the substantive suit, held that, “NERC acted outside the powers conferred on it by the Act and failed to follow the prescribed procedure.

The court was also of the view that “NERC has not shown that it acted in due obedience to the prescribed procedures and that there is no evidence that NERC complied with Section 76(6)(7) and (9) of the EPSRA Act.

The court further held that “of all the legal requirements, it appeared the only one complied with by NERC was that it announced the new tariff in the newspapers.

The court said that, “it is clear from the affidavit evidence that the increase in tarriff was done by NERC in defiance of the order of the court made on May 28, 2015 which directed parties in the case to maintain the status quo”.

On this issue, the court said, “the law is that every person upon whom an order is made by a court of competent jurisdiction must obey it, unless and until the order is discharged and set aside at the Appeal.

Consequently, the court held that,” the tariff increase from July 1, 2015 was done in breach of the ‘status quo’ order”, adding that “NERC’s action, was therefore, clearly hasty, reckless and irresponsible”.

Speaking further, Justice Idris said, “this country is in a democracy where the rule of law shall prevail over impunity or whimsical desires. Anything to the contrary will be an invitation to anarchy.

“It is the law that what is done officially must be done in accordance with the law. Investors are free to do business in Nigeria but they shall abide by the law of this country. Nigeria is not a kangaroo State. Nigeria is not a banana Republic.

“It is intolerance and extremely dangerous for any branch of the Executive to create a posture it may not obey certain orders of the court. That is tantamount to Executive recklessness which will lead to lawlessness”, he said.

In view of these, the court while invoking its disciplinary jurisdiction, ordered that “the increment in electricity tariff which took effect after the institution of this action and while a restraining order is subsisting is hereby declared illegal and same is hereby set aside.

“NERC is hereby directed to reverse to the status quo and the commission is hereby restrained from further increasing electricity tariff except it complies strictly with the relevant provisions of the EPSRA”, the court said.

The sum of 50,000 Naira was awarded in favour of the plaintiff.