The Nigerian Electricity Regulatory Commission (NERC), acting under the provisions of the Nigeria Electricity Act, has ordered the establishment of an Independent System Operator (ISO) to take over the market and system operations functions of the Transmission Company of Nigeria (TCN).
This was disclosed in an order by the NERC signed by Chairman and Vice Chairman to the Transmission Company of Nigeria (TCN). The order stated that upon incorporation of the new entity, the TCN should transfer its system operations licence, assets and liabilities to it.
According to the order, TCN will retain its transmission service provider licence and continue to maintain power transmission infrastructure across the country.
It further stated that the Bureau of Public Enterprise (BPE) will incorporate the new company no later than 31st May, 2024 which would be called Nigerian Independent System Operator of Nigeria Limited (“NISO”).
It stated,
- “BPE shall incorporate, no later than 31 May 2024, a private company limited by shares under the Companies and Allied Matters Act to carry out the market and system operation functions stipulated in the EA and the terms and conditions of the system operation licence issued to TCN.”
- “TCN shall conclude the identification and mapping of the assets and liabilities for the system/market operation portion of its business and forward same to the Commission and the BPE no later than 30 June 2024.”
- “BPE shall, through the National Council on Privatisation, conclude the transfer of all the market and system operation assets and liabilities held by TCN to NISO (“Transfer”)”
Shareholding structure and timeline for completion of the transfer
It noted that the new company’s shareholding subscribers will be the Ministry of Finance Incorporated (MOFI) and Bureau of Public Enterprise (BPE) but final shareholding structure shall be subject to further consultation with government and other stakeholders.
Also, the NERC mandated that the transfer of assets and liabilities from the TCN to the new company should be completed no later than 31st August 2024 as the TCN should relinquish its system operator licence at most 7 days after incorporation of the NISO.
What you should know
- The Federal Government had earlier disclosed its intention to unbundle the Transmission Company of Nigeria (TCN) in a bid improve the power sector. The defunct Electric Power Sector Reform Act 2005 (“EPSRA”) had envisaged the transfer of power of the TCN to make it function as system operator to an Independent System Operator (ISO) but clear guidelines for establishment were not provided.
- The New Electricity Act has provided a clear path to the creation of the ISO and how the TCN will transfer the system operations functions to it. By this order, the NERC, as the apex regulator in the power sector, is activating the provisions of the Electricity Act in that regard.
- Until this order, the TCN has had two licences- one as transmission service provider and the other system operator. The establishment of the NOSI will leave the TCN with just one function- as transmission service provider solely.
