NERC Commences Unbundling of TCN and Establishes the Nigerian Independent System Operator

In a notable development, the Nigerian Electricity Regulatory Commission (NERC) has initiated the process of unbundling the Transmission Company of Nigeria (TCN) by introducing the Nigerian Independent System Operator of Nigeria Limited (NISO).

As per an Order dated April 30, 2023, signed by NERC Chairman Sanusi Garba and Vice Chairman Musiliu Oseni, TCN is directed to transfer all market and system operation functions to the newly established entity.

Previously, TCN held transmission service provider (TSP) and system operations (SO) licenses in compliance with the Electric Power Sector Reform Act.

However, the enactment of the Electricity Act 2023 has provided clearer guidelines for the incorporation and licensing of the independent system operator (ISO) and for the transfer of assets and liabilities from TCN to the ISO.

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Following this directive, NERC has instructed the Bureau of Public Enterprises (BPE) to establish a private company limited by shares under the Companies and Allied Matters Act (CAMA), 2020, by May 31.

This new entity, known as the Nigerian Independent System Operator of Nigeria Limited (“NISO”), will take on the market and system operation functions as outlined in the Electricity Act and TCN’s system operation license terms.

NERC has stressed that NISO’s memorandum of association (MOU) will authorize the company to manage all assets and liabilities related to market and system operation on behalf of market participants, consumer groups, or specified stakeholders.

Moreover, NISO will be responsible for negotiating ancillary service procurement contracts with independent power producers and successor generation licensees, as well as carrying out other market and system operation functions specified in its license.

Overall, NERC anticipates that NISO will uphold all contractual rights and obligations concerning market and system operations that were previously held by TCN.

This development signifies a significant advancement in the restructuring of Nigeria’s electricity sector, with the aim of enhancing efficiency.