NERC loses bid to escrow Discos’ accounts

Oscarline Onwuemenyi

29 June 2016, Sweetcrude, Abuja – Two Federal High Courts sitting in the Federal Capital Territory, Abuja, have granted separate injunctions at the instance of eight electricity distribution companies, DISCOs, restraining the Nigerian Electricity Regulatory Commission, NERC, from implementing its directive for the Central Bank of Nigeria, CBN, to escrow the accounts of the distribution companies, who cannot meet their monthly payment obligations to the Nigeria Bulk Electricity Trading Plc, NBET.

Tony Akah, NERC

Tony Akah, Acting NERC boss

NERC and other connected persons were also restrained from compelling the distribution companies from entering into Promissory Note arrangement with NBET, as well as from calling on the Letters of Credit, LC, placed by the Discos with NBET through certain commercial banks, pending the hearing and determination of the Motion on Notice.

The distribution companies had alleged that despite the cash flow problems they faced as a result of NERC’s bad management of the power sector, the regulatory agency had vide a directive with reference No. NERC/MC &R/16/098 of March 30, 2016, directed the apex bank to escrow the accounts of Discos who cannot meet their monthly payment obligations under the vesting contracts and who are yet to place their LC with NBET in accordance with the escrow directive.

The Discos had instituted two lawsuits at the Federal High Court (FHC) – suits No. FHC/ABJ/CS/387/2016 and FHC/ABJ/CS/386/2016 to seek redress for the lingering problems.

At a hearing before Justice Ademola J of the Federal High Court of the FCT, Abuja on June 14, the Discos got an injunction restraining NERC and connected persons from “(i) giving effect to the Escrow Directive and Guidelines; (ii) calling on the Letters of Credit placed by the Discos with NBET through certain commercial banks; and (iii) compelling the Discos to enter into any Promissory Note arrangement, pending the hearing and determination of the Motion on Notice.”

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