NERC: Make haste slowly

After over a year of litigation, the Federal High Court recently gave a judgment in a lawsuit brought by a self-styled human rights lawyer, Mr. Toluwani Adebiyi. Many things about this lawsuit are unclear. We know it complained about certain electricity tariff orders, but since there have been three separate orders made since 1st January 2015 to date, it is unclear which one the Court referred to in its judgment. It is not quite clear what the final orders of the Court are but news reports have it that the Federal High Court determined that the process underpinning the making of the tariff order in question was fatally flawed. Reports indicate further that the Federal High Court set aside the offending tariff order and ordered a return to the status quo ante. It is also not clear what that status quo ante is.

The immediate reaction from NERC, and now from the Ministry of Power, is that an appeal will be lodged against the decision of the Federal High Court, which raises the question that now agitates our minds. Given that parties to litigation in the High Courts have 90 days within which to appeal, why would the interim management of NERC categorically criticise a judgment of the Federal High Court in such a matter of urgent national importance the day after judgment was delivered, BEFORE it could read the judgment, digest it and analyse/consult amongst key stakeholders on its implications and the likely consequences of an appeal?

There are various other questions to consider. For instance, in the absence of Commissioners appointed by Mr. President (itself long overdue by 7 months), under the provisions of the Electric Power Sector Reform Act, 2005, is it within the power of an interim management comprising staff of the Commission to decide to appeal against a decision by a Court of law setting aside a Commission order? Another question: while the appeal is making its way through the courts, presumably up to and including the Supreme Court, which tariff will be implemented? Is it the one set aside? Or one of the “status quo” tariffs? Will the interim management of NERC order Discos to continue with the disallowed tariff? If so and an appeal court eventually upholds the decision of the Federal High Court, presumably a few years down the line, will NERC and the Discos refund to customers the excess paid over what should have been the proper tariff in the first place? If, as is probable, the Supreme Court takes up the appeal and, due to its congested lists, it cannot hear the appeal until after 2021 or later, what will be the fate of the electricity industry in the interim?

It may well be that an appeal is indeed the correct action to take but this matter affects so many important stakeholders in the electricity value chain, including the federal government that is courting rising discontent over an electricity performing at its worst output levels since 1999/2000; counterparties to Discos, such as Gencos and gas suppliers who are owed huge amounts said to be over N500bn for energy delivered to Discos but not paid for; lenders and equity investors who simply want certainty of tariffs so that they can decide when and how to invest in the electricity sector; the Central Bank of Nigeria and Nigerian banks that took a chance on lending into the electricity sector and have so far been disappointed; and of course customers who are completely fed up with being in a market that has failed to deliver any quality service for over a year now. There is a very good chance that all these stakeholders will be left stranded while an appeal slowly makes its laborious way through a congested and inefficient appellate court system.

Therefore, it may be wise to make haste slowly. We are puzzled that the Ministry of Power, Works and Housing would, as reported in the news media, agree with the interim management of NERC to go on appeal before studying the judgment and referring to the Attorney-General of the Federation for advice as to the meaning of the orders of the Court. These are very difficult times for the electricity sector and we believe that the winner-takes-all, deeply adversarial nature of litigation does not help provide the stability and certainty that the electricity sector desperately needs now. If, as is reported, the essence of the Federal High Court decision, is for NERC to follow its own due process (which would ordinarily take no more than 3 or 4 months) is that really such a bad decision? If it has taken us this long, what is another few months in pursuit of doing the right thing?

We see this judgment as an excellent opportunity for the entire electricity sector to pause, reflect and reset. Things have not been well with the industry for 18 months now. Rather than launch an appeal immediately, the interim management of NERC and the Ministry of Power would do well to obtain copies of the judgment, read and consult amongst industry stakeholders as to whether an appeal would be the best course of action, all things considered. Anything else would be an ego trip. After all, neither NERC nor the Ministry of Power exist for themselves or for the egos of their leaders, but rather for the common good. This is what should be uppermost in the minds of decision-makers now.