Manufacturers in Nigeria have expressed serious concerns about the escalating costs of energy, specifically highlighting the significant increases in petrol prices and electricity tariffs over the past year. Reports indicate that the pump price of petrol has surged by approximately 430%, while electricity tariffs for ‘Band A’ consumers have risen by 212%.
Recent Tariff Increases
On April 3, 2024, the Nigerian Electricity Regulatory Commission (NERC) approved a tariff increase for customers in Band A, who typically receive around 20 hours of electricity daily. The new rate was initially set at ₦225 per Kilowatt-hour (kWh), up from ₦66/kWh, but was later adjusted to ₦209/kWh.
The Manufacturers Association of Nigeria (MAN) condemned this hike, arguing that it poses a threat to economic growth. In response, they initiated a legal action against NERC and the electricity distribution companies (DisCos) in the Federal High Court in Lagos to challenge the implementation of the increased electricity tariffs.
Legal Action and Court Ruling
MAN’s lawsuit sought four key reliefs:
- Failure of Due Process: They argued that the proper legal procedures for tariff reviews were not adhered to before the DisCos submitted their tariff review application to NERC on July 31, 2023.
- Regulatory Compliance: The manufacturers contended that the necessary regulatory requirements were not met prior to NERC’s issuance of the Supplementary Order on April 3, 2024, and the subsequent rate adjustment on May 6, 2024.
- Discrimination: MAN claimed that the tariff increase unfairly targeted only Band A consumers, thereby discriminating against them while excluding other bands.
- Administrative Procedures: They emphasized that the defendants must follow the required administrative procedures for tariff reviews before implementing the new rates.
In a setback for the manufacturers, the court dismissed the case on October 7, 2024. The ruling stated that MAN’s suit constituted an abuse of court process, being premature and lacking adherence to Section 51 of the Electricity Act 2023.
Implications
This ruling has significant implications for manufacturers who are struggling to cope with soaring energy costs. With the legal route now closed, manufacturers are left with limited options to address the financial strain caused by increased electricity tariffs. Industry stakeholders are urging for more equitable energy pricing and regulatory processes that take into account the economic realities facing businesses in Nigeria.
As manufacturers continue to face these challenges, their calls for a review of energy policies and tariffs may gain further urgency in the context of the broader economic landscape.
