Court nullifies NERC’s order removing Ibadan DisCo board -

A Federal High Court in Ibadan has in a landmark decision in the case of Ibadan Electricity Distribution Company Plc vs the Nigerian Electricity Regulatory Commission (NERC) set aside NERC’s order removing the board of directors of Ibadan DisCo.

In agreeing with the submissions of Olaniwun Ajayi LP (who represented Ibadan DisCo and its directors), the Court held that the appointment and removal of directors must be in accordance with the provisions of Companies and Allied Matters Act and Electric Power Sector Reform Act (EPSRA).

Specifically, the Court held that there is nothing in EPSRA (being NERC’s enabling law) which permits NERC to make the removal orders.

In further agreement with Olaniwun Ajayi LP, the Court held that Regulation 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 EPSRA.

In the event, the Court nullified Regulation 18 for being inconsistent with EPSRA. In addition, the Court held that NERC cannot be an umpire in its own case, and any allegations of fraud must be investigated (NOT by NERC), but by the police and tried by a competent court.

NERCT had, through its Order No NERC/181/2018 of June 19th 2018, suspended the Board of Directors and other key management staff of Ibadan Electricity Distribution Company (IBEDC) on account of the company’s purported default in the recovery of an inappropriate shareholder loan of N6 billion granted to Integrated Energy Distribution and Marketing Group (IEDMG) Ltd by the utility.

IEDMG is the core investor in IEBDC following the privatisation of electricity distribution companies by the Federal Government. The loan was granted by IBEDC from funds released to all DisCos by the CBN under the Nigeria Electricity Market Stabilisation Funds (NEMSF) for the purpose of improving the networks and reducing aggregate technical, commercial and collection losses.

The Commission had earlier fined IBEDC a sum of N50 million on the 18th September 2017 for non-compliance with Order No NERC/173/2017 directing the company to fully recover the outstanding sum of N5.7bn being the balance of the loan granted by the utility to IEDMG.

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Isaac Anyaogu

Isaac Anyaogu is an Assistant editor and head of the energy and environment desk. He is an award-winning journalist who has written hundreds of reports on Nigeria’s oil and gas industry, energy and environmental policies, regulation and climate change impacts in Africa. He was part of a journalist team that investigated lead acid pollution by an Indian recycler in Nigeria and won the international prize - Fetisov Journalism award in 2020. Mr Anyaogu joined BusinessDay in January 2016 as a multimedia content producer on the energy desk and rose to head the desk in October 2020 after several ground breaking stories and multiple award wining stories. His reporting covers start-ups, companies and markets, financing and regulatory policies in the power sector, oil and gas, renewable energy and environmental sectors He has covered the Niger Delta crises, and corruption in NIgeria’s petroleum product imports. He left the Audit and Consulting firm, OR&C Consultants in 2015 after three years to write for BusinessDay and his background working with financial statements, audit reports and tax consulting assignments significantly benefited his reporting. Mr Anyaogu studied mass communications and Media Studies and has attended several training programmes in Ghana, South Africa and the United States