- NERC revolutionizes Nigeria’s electricity sector by introducing NISO, a game-changer in electricity management, and splitting TCN to streamline operations.
- NERC tasks NISO with managing all market and system operations, ensuring transparency and reliability.
- With a clear timeline by NERC, TCN will hand over its system operation license, marking a pivotal moment towards sustainable energy development.
The Nigerian Electricity Regulatory Commission (NERC) has split the Transmission Company of Nigeria (TCN) and introduced a new directive, effective May 1, 2024. The directive establishes the Nigerian Independent System Operator Limited (NISO).
NISO is tasked with holding and managing all assets and liabilities related to market and system operation on behalf of designated stakeholders, including market participants and consumer groups as specified by NERC.
Under this order, NISO will assume responsibility for executing all market and system operation-related contractual rights and obligations previously held by the Transmission Company of Nigeria (TCN). This transfer process is expected to be completed no later than August 31, 2024, with TCN mandated to hand over its system operation license to NERC within seven days thereafter.
TCN, as a successor company, initially received two separate licenses from the Commission, authorizing its operation as the transmission service provider and system operator for the national grid system.
This development aligns with the objectives outlined in the repealed Electric Power Sector Reform Act 2005 (EPSRA), which envisioned the eventual transfer of the national grid’s system operation function to an Independent System Operator (ISO). The enactment of the Electricity Act (EA) in 2023 marked a significant advancement, providing clearer guidelines for establishing a governance structure, licensing the ISO, and transferring assets and liabilities from TCN.
Section 15 of the EA delineates the procedures for incorporating and licensing the ISO, emphasizing compliance with specified terms and conditions. Upon incorporation and subsequent issuance of an ISO license by NERC, TCN is obligated to transfer all assets and liabilities associated with its market and system operation functions to the newly formed entity.
Meanwhile, TCN will retain its Transmission Service Provider license, oversee transmission assets and liabilities and perform relevant functions related to developing and maintaining power transmission infrastructure.
To ensure a seamless transition process and prevent disruptions to industry operations, NERC must devise a clear plan and timeline for the transfer outlined in Section 15. Furthermore, Section 16(1) of the EA dictates that the subscribers to the ISO’s Incorporation Documents shall be determined by NERC in consultation with relevant stakeholders at the time of incorporation.
This initiative signifies a significant step towards enhancing the efficiency and transparency of Nigeria’s electricity market and system operations. By establishing NISO and delineating clear responsibilities between TCN and the newly formed entity, NERC aims to foster a more robust regulatory framework that supports sustainable energy development and ensures reliable power supply across the nation.