A Federal High Court in Lagos has dismissed a case brought by the Manufacturers Association of Nigeria (MAN) contesting the Band A electricity tariff review enacted by the Abuja Electricity Distribution Company (AEDC) along with other distributors. This ruling, delivered on Monday, was noted in a statement from the Nigerian Electricity Regulatory Commission (NERC) on Thursday, indicating that the court found MAN’s case to be an abuse of the judicial process. The judgment underscored that MAN had prematurely instituted the suit, neglecting to abide by the stipulations outlined in Section 51 of the Electricity Act of 2023.
The crux of MAN’s argument was that the tariff review process instituted by NERC lacked adherence to proper regulatory procedures. They expressed concerns that the required due process for such reviews was not adequately followed when AEDC and other companies applied for the new rates on July 31, 2023. Furthermore, they claimed that the regulatory requirements were disregarded before NERC issued a Supplementary Order on April 3, 2024, and the adjusted rates that took effect on May 6, 2024. By focusing the tariff increase solely on customers classified under Band A, the manufacturers argued that this distinction was discriminatory, unfairly placing the financial burden on a specific group of consumers.
In delivering its judgment, the court highlighted that MAN’s suit introduced no legitimate cause for action, emphasizing that the association had failed to exhaust the necessary dispute resolution channels before seeking judicial intervention. Consequently, the court deemed that the suit lacked compliance with due legal processes, which led to its dismissal. NERC framed the challenges raised by MAN as hasty and improperly filed, insisting that the association should have engaged with the administrative procedures related to the tariff review before resorting to legal action.
The Band A category pertains to high-end customers who do not benefit from government subsidies but are assured of a minimum of 20 hours of electricity supply daily. Companies that fall under this classification have seen their tariff rates reach N209.50 per kilowatt-hour, a significant hike that has reportedly tripled their electricity costs. This substantial increase is seen as having detrimental effects on manufacturing operations, escalating production expenses and impacting overall business viability.
The ruling’s implications extend beyond just the immediate legal outcomes; it underscores the complexities surrounding regulatory compliance in the electricity sector. The court’s decision reiterates the necessity for industry stakeholders to meticulously follow established protocols when contesting regulatory actions and to actively engage in addressing grievances through the prescribed frameworks before seeking judicial relief. Such adherence is crucial for maintaining order and efficiency within the regulatory environment, particularly in an industry as vital as electricity distribution.
Looking ahead, both manufacturers and regulatory bodies must navigate the challenges posed by tariff adjustments and the regulatory landscape. This case serves as a reminder of the importance of dialogue between stakeholders in the energy and manufacturing sectors to avert potential disputes and foster an equitable resolution to issues surrounding tariff reviews and their implementation. With the stakes being high for manufacturers reliant on consistent, affordable electricity, the need for a collaborative approach is evident to mitigate the adverse impacts of such tariff changes on production and economic sustainability.
