Electricity Sector Reform: NERC Unbundles TCN, Establishes Independent System Operator

In a move aimed at enhancing efficiency in Nigeria’s electric sector, the Nigerian Electricity Regulatory Commission (NERC) has announced the unbundling of the Transmission Company of Nigeria (TCN). This development comes alongside the establishment of the Nigerian Independent System Operator of Nigeria Limited (NISO).

The TCN, tasked with transmitting electricity generated by Generating Companies (Gencos) to the national grid and subsequently to Distribution Companies (Discos) and end-users, has been a pivotal player in Nigeria’s power infrastructure.

NERC’s decision, outlined in a recent circular, mandates TCN to transfer all market and system operation functions to the newly formed NISO. This strategic move aligns with the provisions of the Electricity Act 2023, which offers clearer guidelines for the incorporation and licensing of an independent system operator (ISO).

Previously, TCN held Transmission Service Provider (TSP) and System Operations (SO) licenses issued by NERC. However, with the establishment of NISO, TCN will divest its assets and liabilities associated with market and system operations to the newly formed entity.

According to the circular, the Bureau of Public Enterprises (BPE) has been tasked with incorporating a private company limited by shares under the Companies and Allied Matters Act (CAMA) by May 31.

This new entity, to be christened the Nigerian Independent System Operator of Nigeria Limited (NISO), will undertake market and system operation functions as stipulated in the Electricity Act and the terms of TCN’s system operation license.

NERC has delineated NISO’s responsibilities, which include managing assets and liabilities related to market and system operation on behalf of market participants and consumer groups. Additionally, the ISO will engage in negotiating contracts for ancillary services with independent power producers and generation licensees, besides performing market and system operation functions to benefit market participants and system users.