Mixed reactions have continued to trail the recent Federal High Court judgement which ordered the reversal of 45 per cent electricity tariff increase by the Nigerian Electricity Regulatory Commission (NERC) with those representing the larger business interest claiming over N500billion worth of investment is at risk while consumer rights advocates hold the view and very strongly too that the judgement is a victory for the masses. Ibrahim Apekhade Yusuf in this report examines the issues
Although a Federal High Court judgement had last week ordered the reversal of 45 per cent electricity tariff increase by the Nigerian Electricity Regulatory Commission (NERC), the ding dong affair between electricity consumers on the one hand and the Commission on the other hand is far from being resolved as indications are rife that both parties have returned to the trenches.
It may be recalled that court in a landmark judgment, declared the hike in tariff illegal and directed that it should be reversed immediately just as it awarded N50,000 cost against the NERC.
Dissecting the court order
In the view of analysts, the judgment of the court is predicated upon the fact that the NERC had failed in its statutory obligation as clearly pointed out by the plaintiff, Toluwani Adebiyi Esq, relying on Section 32 of Sector Power Reform Act 2005.
The court also held that the conditions precedent necessary for increasing tariff, the due process as provided by the enabling Act were not adhered to as contained in the whole of S.76, section 76(2)(a) in particular gives the condition of efficiency for the Commission to be able to recover loss or increase hike, that section is clear that only the licensee, DISCOs that operates efficiently that can recover loss or increase hike, have never been efficient.
Therefore it is this same points and positions of law that the court of Appeal will also look into and dismiss their Appeal, with substantial cost, they ought to sit down and analyze the 200 pages of landmark judgment and realise on time that tough time and gross failure await them at the appellate court.
However, following the court judgement, the NERC has directed its lawyers to file an appeal against the court ruling during a press briefing that was held at its headquarters in Abuja.
Speaking at the briefing, the Acting Chief Executive Officer, NERC, Dr. Tony Akah, said the commission was aware of the judgment which declared the electricity tariff regime that became operational on February 1, 2016 illegal.
He said, “The commission respects this decision of the court but we are dissatisfied because it represents the reversal of the commercial foundation upon which contracts for gas, hydro, coal and solar feedstock for the production of electricity have been predicated.
“This judgment, in our view, is a setback to the progress made so far in the electricity sector. Therefore, we challenge this decision. We have instructed our lawyer to appeal. Consequently, the commission has filed for stay of execution and a notice of appeal of the judgment.”
Akah stated that private power production and distribution was relatively new in Nigeria and that development such as the court ruling must be seen in that context as the laws begin to face judicial tests of interpretations.
DISCOs spoil for war
As Nigerians wait in bathed breathe the outcome of the appeal filed by the NERC, stakeholders in the power sector have expressed fears that the tariff reversal has dire implications for the energy sub-sector and the economy as a whole.
The 11 electricity distribution companies DISCOs have insisted that Nigerians would have to choose between working with them to improve the country’s electricity system for their benefits and going back to darkness which they said had been the situation long before they took over from the government.
The DISCOs had through their association, the Association of Electricity Distribution Companies (ANED) at a press briefing in Abuja that even with the 2015 tariff which the law court disbanded last week, it was still quite difficult for them to operate and meet the demands of consumers in their networks.
They also stated that public electricity services in the country would have to be priced appropriately for steady investments and improvements to be recorded, hence its decision to respect the Lagos court judgement; file for a stay of its execution; and then appeal against it at a higher court.
The Executive Director for Research and Documentation of ANED, Mr. Sunday Oduntan alleged at the briefing that the Nigerian Electricity Regulatory Commission (NERC) knew that the 2015 tariff was inadequate to attract investment in the sector because it is not absolutely cost reflective.
He said NERC and the government have for more than two years failed to live up to the agreement it reached with the Discos that a cost reflective tariff will be allowed in the sector to attract investments into it.
“Nigerians have an option between light and darkness. If we need darkness, let us continue the way we are going now. Let’s continue to say they should reverse the tariff, let’s continue to steal energy, let’s continue to vandalise gas pipelines, let’s continue not paying our bills.
“If we continue, darkness looms, if we can change we can increase the power supply. We can progress gradually from incremental to stable to uninterrupted power supply, but we can’t achieve this without the cooperation of everybody.
“Inappropriate tariff leads to shortfall, shortfall leads to funding gap and funding gap leads to inefficiency, because we will not be able to give appropriate service,” said Oduntan.
ANED boss said the DISCOs could not get loans from banks prior to the current tariff as the business was deemed not bankable.
“I enjoin us to look at the issues in the sector. Inappropriate tariff leads to shortfalls and that leads to funding gaps which has risen above N300billion.
“The MYTO 2015 corrects the funding gap but it is spread over 10 years and recovered gradually; if you look at the template, the tariff will go down after the first three years,” Oduntan explained.
Mr Oduntan admitted that but for vandals’ actions on oil and gas infrastructures since March this year, industry operators expected a rise in generation to about 6,000Mw from the 5,072Mw attained in February, a day after the tariff was enforced.
He said significant improvement in power supply would have led to more revenue generation and speedier investments in rolling out meters, transformers and strengthening of networks since March.
Femi Adegbenro, an economic analyst, said the quantum of investment in the power sector which is within the neighbourhood of over N500billion risk being lost if the court is allowed to have its way.
Besides, Adegbenro said massive job loss is also inevitable if the court ruling stands.
Lawyers’ reaction
As far as lawyers are concerned, the last may not have been heard of the matter.
Barr. Toluwani Adebiyi, a human right activist and plaintiff in the matter, in a statement made available to The Nation said: “Tough time and unimpeachable failure await NERC and DISCOs at the Court of Appeal, they don’t have the slimmest chance of surviving the storm.”
Raising a poser, Adebiyi asked: “The old tariff may not be market reflective, but are Nigerians getting value for their payment? No, so it is nothing but gross exploitation. Nigerians are ready to pay any amount so far they are getting value for their payments.”
The lawyer who has been in the forefront of advocacy against electricity tariff, said it was sheer insensitivity on the part of the NERC and its cohorts, DISCOs to be carrying on the way they have been doing.
“Let assume their Managements know nothing about law, but don’t they have minds of their own to know that those advising them are only interested in more millions they will get from them?” he queried.
The human rights lawyer who declared that the Commission was being ill-advised by those out insensitive to the plight of the suffering masses, said they would face posterity.
“Those people advising them are only interested in their own belly, their own personal gain, how they can make more money from them. This is the money they should have used to bring more improvement on the prevailing and protracted power problems.”
While recalling that the court had initially granted relief to abolish fixed charge, he wondered why the “NERC‘s lawyers did not take to steps to initiate terms of settlement to be adopted as court’s consent judgment particularly with DISCOs’ intention to meter all consumers latest by 2017, which is answer to second relief sought and with steps to improve on quality supply and answer to the third relief sought.”
Regretfully, he said: “These people failed to initiate such consent judgment. I took the step to initiate same, we had about two meetings, because I know with a keen sense of responsibility that the people are investors and the primary objective of every business is to make profit, though not at the exploitative detriment of the consumers.”
A situation, where the Commission will allow unpatriotic individuals to keep on deceiving them for their own selfish financial gain is grossly absurd, he stressed.
Last word for NERC
On what he thinks may be probable outcome of the court, Adebiyi said it would be unfair to preempt the judge but however urged the Federal Government and all well-meaning Nigerians to prevail upon NERC and DISCOs to comply with the judgment.
Waxing philosophical, he said: “They cannot survive this battle and storm, filing notice of Appeal and application for stay cannot impair the legal validity of the judgment, not until the appeal is entered and the application for stay is heard and granted, provided they have a good appeal, but the appeal is obnoxiously lame and incurably bad and bound to fail ab initio.”
