Court Annuls Hike in Electricity Tariffs

  •  House asks FG to halt further hike
  • No plan to increase rates, says NERC

Davison Iriekpen in Lagos and Damilola Oyedele in Abuja

A Federal High Court in Lagos wednesday annulled the hike in electricity tariffs announced by the Nigerian Electricity Regulatory Commission (NERC) last year.

The presiding judge, Justice Mohammed Idris, while delivering judgment in a suit filed by a human rights lawyer, Mr. Toluwani Yemi Adebiyi, described NERC’s action as procedurally ultra vires, irrational, irregular and illegal.

Adebiyi had gone to challenge the hike in electricity tariffs as announced by NERC last year, arguing that there was no point increasing prices when there was no commensurate increase in power supply.

The judge while relying on Sections 31, 32 and 76 of the Electricity Power Sector Reform Act (EPSRA), in deciding the substantive suit held: “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 did not show that it acted in due obedience to the prescribed procedures and that there was no evidence that NERC complied with Section 76(6)(7) and (9) of EPSRA.

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 tariffs in the newspapers.

The judge consequently ordered NERC to immediately revert to status quo.

He also restrained the commission from further increasing electricity tariffs except it complies strictly with the relevant provisions of the EPSRA.

The court further held: “It is clear from the affidavit evidence that the increase in tariffs was done by NERC in defiance of the order of this 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, saying that NERC’s action was 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 to 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 that it may not obey certain orders of the court. That is tantamount to executive recklessness which will lead to lawlessness.”

In view of these, the court while invoking its disciplinary jurisdiction, made the following orders: “The increment in electricity tariffs 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 revert to the status quo and the commission is hereby restrained from further increasing electricity tariffs except it complies strictly with the relevant provisions of the EPSRA.”

The sum of N50,000 was awarded in favour of the plaintiff.

Adebiyi, in the substantive suit, had sought an order restraining NERC from implementing any upward review of electricity tariffs without a meaningful and significant improvement in power supply at least for 18 hours a day in most communities in Nigeria.

As the court gave its ruling, the House of Representatives yesterday also urged the federal government to order a halt in any planned further increase in electricity tariffs, saying it was not in the public interest.

It said this following a news report that electricity distribution companies (Discos) had written to NERC to request a 100 per cent hike in tariffs.

The House also mandated its Committee on Power to investigate the rationale behind the last tariff hike, and ascertain if the increase was commensurate with the investments made by the Disco in the power sector.

The resolutions were prompted by a motion of matter of urgent public importance by Hon. Aliyu Madaki (Kano APC).

Madaki recalled that the Manufacturers Association of Nigeria (MAN) had already registered its opposition to the proposal.

He complained that there had been no corresponding improvement in electricity supply, despite the 45 per cent tariff hike in February 2016.

“I am concerned that if the proposed futher hike is not put on halt, its multiplying effect on the economy and the social well being of Nigeria cannot be quantified,” Madaki said.

Majority Leader, Hon. Femi Gbajabiamila (Lagos APC), described the operations of the Discos as a scam, and called for a review of the sale of the power assets.

“It is a scam as Nigerians pay heavily without obligation on the part of the Discos… They do not have the financial capacity or the technical know how. When you talk about investors, you consider institutional investors, not portfolio businessmen,” Gbajabiamila said.

Hon. Phillip Shuaibu (Edo APC) noted that there was a direct link between the rising rate of unemployment in the country and poor supply of electricity in the country.

This, he said, was as a result of several businesses being forced out of operations, as they cannot break even by using alternative sources of power supply.

The motion was also referred to the Ad hoc Committee on the Sale of Power Assets for appropriate action.

However, in response to the news report on the demand by Discos for a further upward review of tariffs, NERC yesterday denied the report.

In a statement signed by the head of the media unit of the commission, Michael Faloseyi, NERC said that it was also not contemplating a hike in electricity tariffs, just as none of the operators in the Nigerian Electricity Supply Industry (NESI) had requested the increase.

The commission said: “Contrary to this wild and speculative media report, NERC has not received any request for 100 per cent increase in tariffs from any electricity industry operator, as most of them are at this moment pre-occupied with the challenges of improving service delivery imposed on them by the existing tariff regime.

“The commission as well as the industry is responsible enough to appreciate the state of the economy, level of power generation, how Nigerians are coping and would, therefore, not make any decision that could further aggravate the challenges faced by the power sector and the economy.

“Critical stakeholders in the economy are further advised not to be quick in joining the fray by reacting to baseless media speculation thereby lending credence to rumours and wild imaginations.”