Trouble looms as NERC ignores court order baring tariff increase

The new electricity tariff billed to take effect from Wednesday could face a legal challenge arising from an injunction, a Federal High Court in Lagos, granted a human rights group halting the review.

Justice M.S Hassan presiding over the Court granted an order of interim injunction restraining the Nigerian Electricity Regulatory Commission (NERC)and other respondents including power distribution companies (DisCos), Bureau of Public Enterprise (BPE) and Nigerian Bulk Electricity Trading Company (NBET) and the Transmission Company of Nigeria (TCN) from implementing and enforcing the Minor Review of the Multi-Year Tariff Order (MYTO) 2015 and the Remittance Order 2019 which reviewed electricity pricing and DisCos minimum remittances.

It is upon the basis of these orders that the Commission approved a review of the tariff increase. Following negotiations with DisCos, the commission approved what it called a “Service-Reflective Tariff” plan which prescribes price increase based on the number of hours customers get power daily.

This motion to a maintain status quo was filed by the Incorporated Trustees of the Human Rights Foundation in December 2019.

“It is hereby ordered as follows: That status quo ante bellium shall be maintained by all the parties in this suit pending the determination of the Motion on Notice.

That this suit is adjourned to the 20th day of January, 2020 for the hearing of the Motion on Notice for interlocutory injunction dated the 2nd day of December 2019 before the substantive judge,”

The court in February granted the motion and inquiries showed that neither the NERC nor the DisCos have provided a defense.

“There must be value for the power consumers are paying for but that cannot happen if all that is done is milking them,” said Chinedu Anaje, managing partner at AO2 Law, the legal representatives of Human Rights Foundation.

Anaje faulted the review because, in his view, customers were not carried along and there was no assurance that it will guarantee an improvement in service delivery.

He also said that inflicting a price increase on consumers whose purchasing power and income have been adversely affected by the pandemic makes the timing inauspicious for an upwards price review.

However, in February, NERC published a Public Notice of Applications for Tariff Review and Request for Intervenors to participate in Tariff Hearings to satisfy the provisions of the law requiring the public’s input in plans to review tariffs.

“The request for rate review is premised on the need to incorporate changes in macroeconomic parameters and other factors affecting the operational efficiency of the electricity distribution companies (DisCos) and Transmission Company of Nigeria Plc. This Consultation Paper sets out the proposed rates submitted by the distribution licensees for public comments,” NERC said in the notice.

Anaje in June wrote to the Commission intimating it of the order of the court and warning it would sue it for abuse of proceedings if it proceeded with the planned tariff increase.

“We note further that in flagrant defiance and disregard to the status quo order made by the Honourable Court, NERC has proposed to increase electricity tariff payable by electricity consumers, effective from July 1, 2020. We consider this proposed step by NERC as contemptuous and an abuse of the process of law,” the letter seen by BusinessDay said.

The scenario currently at play is an eerily familiar one. In May 2015, Toluwani Adebiyi, a Lagos-based lawyer and activist, sued NERC and secured a judgment barring the commission from increasing electricity tariff until every household in the country enjoys at least 18 hours of uninterrupted power supply on a daily basis.

This judgment which was vacated in 2018, contributed to impairing the ability of DisCos to charge cost-reflective tariff and deterred investments into the sector.