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Court overrules NERC on IBEDC board removal, nullifies commission’s regulation

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Court Overrules NERC on IBEDC Board Removal, Nullifies Commission’s Regulation

An Abuja Federal High Court Friday, 10.07.2020 set aside the order of the Nigerian Electricity Regulatory Commission, (NERC) removing the Tunde Ayeni led Board of Directors of the Ibadan Electricity Distribution Company, IBEDC.

In a landmark judgement, Justice Taiwo O. Taiwo of Abuja Federal High Court agreed with the submissions of Muyiwa Balogun Esq., Partner at Olaniwun Ajayi LP, who represented IBEDC and its Directors, that the appointment and removal of Directors must be in accordance with the provisions of Companies and Allied Matters Act, CAMA and the Electric Power Sector Reform Act, 2005 (ESPRA).

Specifically, the court held that there is nothing in ESPRA, NERC’s enabling law, which permits it, NERC, to make the removal order.

It will be recalled that NERC, in an order of 19th June 2018 directed IBEDC to commence the process of dissolution of its Board within 21 days period, citing alleged delay in the repayment of some loans by IBEDC investors.

READ ALSO: NERC unbundles TCN into transmission, operations

The IBEDC directors, led by Tunde Ayeni, however responded swiftly to the allegation, stating that it has lived up to its financial commitments to IBEDC, disclosing that as at Thursday 14 June 2018, it had paid its monthly commitment up to date.

In a bid to resolve the matter once and for all, the aggrieved directors sued NERC for its decision to suspend them from the Board of IBEDC.

In today’s ruling, Justice Taiwo further held that Section 18 of the Electricity Industry (Enforcement) Regulation 2014, which purports to give NERC the powers to remove directors is ultra vires, as it goes beyond the remit of ESPRA. The court, therefore nullified Section 18 of the Regulation for being inconsistent with ESPRA.

In addition, the court held that NERC cannot be an umpire in it’s own case, and any allegations of fraud must be adjudged, not by NERC, but by a competent court.

Analysts have described the ruling as a landmark victory, not just for the Tunde Ayeni led Board of IBEDC, but for investors in the power sector who were taken aback and found the decision of NERC rash and draconian. Many had contended then that such decision by a regulator was capable of discouraging both local and foreign investors from injecting the much needed private capital that is required to develop the Nigerian power sector and propel the economy.

Vanguard Nigeria News

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