February 20, 2024 Public Affairs

Speech Delivered by the NERC Chairman During the 4th NERC Seminar for Judges on February 20, 2024

Protocol On behalf of the Nigerian Electricity Regulatory Commission, it is a great honour for me to welcome you all to the 2024 Judges Seminar. For several years, this seminar has been a tradition and a recurring item in the Commission’s work plan until recently when steering the reform agenda took the front burner. One of the key objectives of the seminar is to stimulate a discourse on emerging legal issues relating to the Nigerian Electricity Supply Industry and to apprise the judiciary of the recent changes in the regulatory landscape. Our Commission is vested with delegated powers to enact subsidiary legislation relating to the workings of the power sector. Therefore, NERC has powers to issue regulations and technical codes that should be complied with, by all industry participants and licensees. The Commission further has a quasi judicial function under which Commissioners often sit as a panel to hear and adjudicate on matters relating to disputes, appeals, objections, rates, etc in the industry. However, the success of this aspect of our work at the Commission is at the intersection of this delegated responsibility and the work of the judiciary. By way of background, the Nigerian Power Sector, over several years, has gone through very difficult times, but even more difficult since the commencement of the reform agenda. The reform of any economic sector often requires a number very difficult decisions, - most often with a potential for impact on the welfare of the wider public. This is relevant as the institutions we regulate are public utilities providing essential services to the Nigerian public. In setting the context of our operating environment, I crave your indulgence for a bit of a recent history. A civil rights lawyer commenced action against the Commission & 11 DisCos in May 2016. This action was triggered by the tariff order issued by the Commission prescribing the rates chargeable by DisCos, effective 1st January 2015. The questions for determination were principally whether NERC had lawfully approved an increase in tariffs without significant improvement in supply; whether NERC had sufficiently consulted prior to the approval of the new rates. The court hearing the matter granted an injunction on the implementation of the tariff order issued by the Commission, literally suspending the new rates payable by consumers. This singular action stalled the reform of the electricity market for several years while awaiting a determination of the court. The consequence of the protracted delay created a fiscal burden of billions of Naira on the Federal Government arising from revenue shortfalls for market participants. The Manufacturers Association of Nigeria that joined in resisting the new rates are now heavily indebted in billions to DisCos and there seems to be no path to recovery, even in the medium term. Perhaps, the benefits of a seminar such as the one we are hosting today may have led to a different outcome, by expediting a decision of the courts on the matter, in acknowledgement of the contingent risks of the litigation. The outline of the 2024 Judges Seminar was carefully chosen to ensure that we provide an opportunity for your Lordships to catch up on industry developments over the last few years. We will start the day with a presentation that may best be described as “Electricity 101”. This would be followed over the next 2 days by presentations on topical industry issues by very distinguished professors, lawyers, investors, including the architects of the Electricity Act 2023. We therefore invite Your Lordships and invited guests to very engaging sessions as we work towards eradicating patches of darkness in our society. We thank you all for your attendance.

Sanusi Garba
February 20, 2024