NERC Orders Unbundling Of TCN, Registration Of Independent System Operators

THE Nigerian Electricity Regulatory Commission (NERC) has directed the Bureau of Public Enterprises (BPE) to register the Independent System Operator as a separate entity from the Transmission Company of Nigeria (TCN) with the Corporate Affairs Commission within thirty days.

The Nigerian Independent System Operator Limited will manage the national grid and oversee other system operations involving market contracts and transactions.

TCN, the successor business to the defunct Power Holding business of Nigeria (PHCN), was previously given two licenses by NERC, classifying it as a Transmission Service Provider and an Independent System Operator.

However, in accordance with the Electricity Act 2023, NERC's latest order requires TCN to transfer all system and market operations assets, contracts, and staff to the newly formed Independent System Operator organization.

This formal unbundling of TCN into Transmission Service Provider (TSP) and Independent System Operator is consistent with the provisions established in the Electricity Act 2023.

The NERC's action is seen as a response to the regular national grid failures, which have resulted in four nationwide blackouts this year alone.

According to the directive, BPE must establish a private company limited by shares under the Companies and Allied Matters Act by May 31 to carry out the designated market and system operation functions outlined in the Electricity Act, as well as the terms and conditions of TCN's system operation license.

The newly constituted corporation, to be known as the Nigerian Independent System Operator of Nigeria Limited (NISO), would manage all assets and liabilities associated with market and system operations on behalf of market participants and consumer groups.

Furthermore, NISO will negotiate contracts for the acquisition of auxiliary services and ensure compliance with the requirements of its license, while its initial subscribers will be BPE and the Ministry of Finance.

In addition, NISO will negotiate contracts for the acquisition of auxiliary services and verify compliance with the requirements of its license, with BPE and the Ministry of Finance Incorporated (MOFI) as its inaugural subscribers.

The ultimate NISO shareholding structure will be defined following additional talks with government authorities, market participants, and industry stakeholders.