Court Reaffirms Order against NERC from Escrowing Disco Accounts

Ejiofor Alike

A Federal High Court sitting in Abuja yesterday restrained the Nigerian Electricity Regulatory Commission (NERC) from implementing the agency’s March 2016 directive to the Central Bank of Nigeria (CBN) to escrow the accounts of electricity distribution companies, who cannot meet their monthly payment obligations to the Nigeria Bulk Electricity Trading Plc (NBET).

After listening to the arguments of counsel to the Abuja Electricity Distribution Company Plc and four others, the presiding judge, Justice Okon Abang, held that “an order is hereby made in the interim but inter parties that pending the hearing and determination of the motion on notice, the defendants, their agents, servants, privies, etc. are hereby restrained from giving effect to the Escrow Directive dated March 2016 and the Escrow Guidelines.

“It is also ordered that the defendants shall not give any directive to banks, including the CBN to escrow the accounts of the plaintiffs in this matter pending the hearing of the motion on notice; and the plaintiffs are hereby commanded to endorse Form 48 and serve on the defendants,” the court held.

The court adjourned the matter to 12 noon on June 28, 2016 for hearing of the motion on notice and advised counsel to exchange the necessary processes before the next date as it will not entertain any application for adjournment.
Justice Abang had earlier in the suit No. FHC/ABJ/CS/386/2016, ordered that NERC and NBET be put on notice.

He had also directed that NERC and NBET must refrain from taking any action capable of frustrating the hearing of the Discos’ motion on notice for interlocutory injunctions, until the hearing of the motion on notice yesterday.
Two Senior Advocates of Nigeria (SANs), Professor Konyin Ajayi and Mr. Oluseye Opasanya led the applicants/plaintiffs during the first hearing.

In a separate suit No. FHC/ABJ/CS/387/2016 before Justice Ademola J of the Federal High Court of the FCT, Abuja, which was instituted by the Enugu Electricity Distribution Company Plc and two others, the trial judge had on June 14, granted an injunction restraining NERC and connected persons from “(i) giving effect to the Escrow Directive and Guidelines; (ii) calling on the letters of credit placed by the Discos with NBET through certain commercial banks; and (iii) compelling the Discos to enter into any Promissory Note arrangement, pending the hearing and determination of the motion on notice.”
The eight Discos have argued that the federal government and NERC have reneged on government’s statutory obligation to the power sector and electricity consumers.

According to them, the Electric Power Sector Reform Act (EPSRA) in Part VIII obligates the federal government, through NERC to provide funds to subsidise indigent electricity consumers, who cannot pay electricity bills.

“Such subsidy and other obligations of the federal government has not been satisfied, hence the difficulty in improving the power sector, as the Discos are unable to collect payments for electricity supplied, the price of which keeps rising, even though, there is no commensurate power generation to be distributed by the Discos,” the Discos argued.

The Discos also accused NERC of introducing unwholesome regulations and undue interference in the management of the business of the Discos in a manner that frustrates the efforts of the private investors.

According to the Discos, the electricity market has been badly managed by NERC, such that the Discos are not able to meet their obligations under the various industry contracts entered into with various counterparties to facilitate their activities in the power sector.