|
Listen to article
|
Nigeria’s manufacturing sector is grappling with a severe crisis, as surging energy costs, combined with other crippling constraints, have driven production and logistics expenses to unsustainable levels. These escalating challenges are pushing the sector to the verge of collapse, threatening the livelihoods of workers and the stability of industries nationwide.
Manufacturers have consistently sounded the alarm over the detrimental effects of soaring energy costs, which, in the last year alone, have seen the pump price of petrol skyrocket by an alarming 430 per cent. In parallel, electricity tariffs for ‘Band A’ consumers have surged by 212 per cent, further squeezing the sector’s capacity to maintain operations and threatening to erode the competitive edge of local industries.
In a decision made on April 3, the Nigerian Electricity Regulatory Commission (NERC) confirmed an increase in electricity tariffs for those classified as Band A customers.
These consumers, who typically receive around 20 hours of electricity daily, are set to see their rates rise from N66 per Kilowatt-hour (kWh) to N225/kWh, although this was later revised down to N209/kWh.
The hike in electricity tariffs has been criticized by the Manufacturers Association of Nigeria (MAN), which asserts that it jeopardizes economic growth. In light of this situation, MAN has filed a legal challenge at the Federal High Court in Lagos to contest the tariff increase.
The manufacturers are pursuing four key reliefs in their case. They maintain that the due process outlined in the Act for tariff reviews was not properly executed before the distribution companies (DisCos) filed their application with the Nigerian Electricity Regulatory Commission (NERC) on July 31, 2023.
They also argue that regulatory requirements for tariff reviews were ignored prior to NERC issuing the Supplementary Order on April 3, 2024, and the subsequent rate adjustment on May 6, 2024.
Read also: Dispute Erupts As Manufacturers Spurn NBS Inflation Data
MAN also held that placing the burden of the tariff increase on only Band “A” feeders and leaving out other bands amounted to discrimination against such consumers; and that the defendants must comply with administrative procedures for tariff review before rightfully implementing the April and May Supplementary Orders.
NERC however objected to the suit, stating that MAN’s case constitutes an abuse of court processes, being hasty and prematurely filed without following due process of the law.
But in a significant setback to the manufacturers’ efforts to reverse the electricity tariff to its previous price, the court struck out the case.
In the judgment delivered on 7th October 2024, the court considered all the parties’ arguments and ruled that MAN’s suit was an abuse of court process being premature and without due regard to the provisions of section 51 of the Electricity Act 2023.
