Nigeria: Why We're Insisting On 45 Percent Electricity Tariff Hike - NERC

The Nigerian Electricity Regulatory Commission (NERC) has given reasons why it rejects last Wednesday's order by the Federal High Court, Lagos declaring as illegal the February 1, 2016 electricity tariff.

Justice Mohammed Idris had ordered the electricity sector regulatory agency to immediately rescind the multi-year tariff order (MYTO), as the process that led to a 45 per cent hike in electricity charges was illegal.

But, the acting chairman of the commission, Anthony Akah, described the court order as "a major setback to the progress made so far in the electricity sector".

Mr. Akah, who was speaking in Abuja in his first official reaction to the court order on Friday, said although the commission respected the decision, it would challenge it.

"This judgment, in our view, represents the reversal of the commercial foundation upon which contracts for gas, hydro, coal and solar feed-stocks for the production of electricity were predicated," he said.

"It also extends to other service improvement contracts entered into by the operators for the development of electricity sector and the ultimate improvement in the quality of service delivery to consumers."

Mr. Akah said the commission had already instructed its lawyers to file for a stay-of-execution of the order, while a notice of appeal of the judgment had been issued.

The NERC chairman said the commission reserved the right to explore other legal avenues within the law to challenge the decision.

Urging investors and customers not to panic as the commission sought a resolution to the issues, Mr. Akah said NERC remained committed to the provision of the right regulatory framework to promote private investment in the electricity supply industry.

"We are going to study the full judgment, and based on the interpretations in it, would react appropriately. The electricity sector is a very complex industry which thrives on regulatory certainty.

"The MYTO 2015, which the court order declared illegal, provided a long-term pact to prospective investors to determine in advance what the tariffs would be, Based on it, a lot of improvement and progress in the sector were recorded, because most people based their investment decisions on it."