Court Nullifies NERC’s Order Sacking Ibadan DisCo Board

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Nullifies electricity industry enforcement regulation 2014

Federal High Court in Abuja yesterday set aside the decision by the Nigerian Electricity Regulatory Commission (NERC) removing the Board of Directors of the Ibadan Electricity Distribution Company (IBEDC) otherwise known as Ibadan Disco.

The trial judge, Justice Taiwo Taiwo, nullified NERC’s Regulation 18 of the Electricity Industry (Enforcement) Regulation 2014 for being inconsistent with the Electric Power Sector Reform Act (ESPRA).

Justice Taiwo in agreeing with the submissions of Olaniwun Ajayi who represented Ibadan Disco and its directors, held that the appointment and removal of directors must be in accordance with the provisions of the Companies and Allied Matters Act (CAMA) and ESPRA.

Specifically, the court held that there was nothing in EPSRA being NERC’s enabling law which permits NERC to make the removal directive.

In further agreement with Olaniwun Ajayi, the court held that Regulation 18 of the Electricity Industry (Enforcement) Regulation 2014, which purports to give NERC the powers to remove directors was ultra vires, as it went beyond the remit of EPSRA.

It also held that NERC could not be an umpire in its own case, adding that any allegations of fraud must be investigated not by NERC, but by the police and tried by a competent court

NERC had, through its Order No NERC/181/2018 of June 19, 2018, suspended the Board of Directors and other key management staff of IBEDC on account of the company’s purported default in the recovery of an inappropriate shareholder loan of N6 billion granted to IEDMG Ltd by the utility.

IEDMG is the core investor in IEBDC following the privatisation of electricity distribution companies by the federal government.

The loan was granted by IBEDC from funds released to all Discos by the Central Bank of Nigeria (CBN) under the Nigeria Electricity Market Stabilisation Funds (NEMSF) for the purpose of improving the networks and reducing aggregate technical, commercial and collection losses.

The commission had earlier fined IBEDC N50 million on September 18, 2017 for non-compliance with Order No NERC/173/2017 directing the company to fully recover the outstanding sum of N5.7billion being the balance of the loan granted by the utility to IEDMG.