FG Unbundles TCN, Removes System Operations from Transmission Firm
The Nigerian Electricity Regulatory Commission (NERC) yesterday yanked off the control of the electricity sector Independent System Operator (ISO) from the Transmission Company of Nigeria (TCN) in line with the new Electricity Act (EA) 2023.
Currently, the wholly government-controlled TCN has three functional departments: The Transmission Service Provider (TSP), The Market Operator (MO), and the System Operator (SO).
The system operator, which has been subsumed under the TCN, controls the physical operation of the electricity system, including managing the transmission grid lines, ensuring reliability, and maintaining the grid’s technical stability through planning, dispatch, and control.
NERC, in the new document signed on April 30 by its Chairman, Sanusi Garba and Vice Chairman,
Musiliu Oseni, stated that the new Order shall take effect from May 1, 2024.
With the development, the TCN is expected to transfer to the new operator to be called the Nigerian Independent System Operator of Nigeria Limited (NISO), the assets and liabilities held by it relating to systems operations.
In order to achieve the objective of the creation of the ISO, the commission said it held several stakeholder consultations and public hearings on the determination of the matter.
It said the outcome of the consultations and hearings indicated that the Nigerian electricity supply industry requires an ISO to provide confidence to market participants.
“This Order seeks to: mandate TCN to comply with the provisions of the EA on the incorporation of the ISO and provide clear directives to TCN to incorporate the ISO.
“Provide TCN with the procedure for the transfer of the assets and liabilities of the market and system operations portion of the business that currently vests in TCN to the ISO.
“The BPE shall incorporate, no later than May 31, 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.
“The name of the company shall, subject to availability at Corporate Affairs Commission (CAC), be the Nigerian Independent System Operator of Nigeria Limited (NISO),” it stressed.
According to the electricity regulatory agency, the new entity shall hold and manage all assets and liabilities pertaining to market and system operation on behalf of market participants and consumer groups.
NERC added that it shall also carry out all market and system operation-related contractual rights and obligations novated to it by the TCN as well as negotiate and enter into contract for the procurement of ancillary services with independent power producers, successor generation licensees, among others.
It listed NISO's initial subscribers as the BPE and the Ministry of Finance Incorporated (MOFI), with the final shareholding structure of NISO to be determined after further consultations with government, market participants and industry stakeholders.
“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 June 30, 2024,” NERC added.
NERC emphasised that every person employed by TCN to perform market and system operations immediately before the transfer date shall be transferred to the service of NISO on terms not less favourable than those enjoyed by him/her immediately prior to his/her transfer.