NERC Decouples TCN, Establishes Fresh System Operator

The Nigerian Electricity Regulatory Commission (NERC) has unbundled the Transmission Company of Nigeria (TCN) by establishing the Nigerian Independent System Operator of Nigeria Limited (NISO).

NERC made this known in an Order dated April 30, 2023 and signed by NERC chairman, Sanusi Garba and vice chairman, Musiliu Oseni.

NERC, also ordered the Bureau of Public Enterprises, (BPE), to within 30 days register the Independent System Operator as a distinct entity from the Transmission Company of Nigeria, with the Corporate Affairs Commission.

The Nigerian Independent System Operator Limited will be responsible for managing the national grid and other system operations related market contracts and transactions.

TCN as a successor company of the defunct Power Holding Company of Nigeria, PHCN, was issued with two licences by NERC as a Transmission Service Provider and Independent System Operator.

The order formally unbundles the TCN into Transmission Service Provider, TSP and Independent System Operator, as prescribed in the Electricity Act 2023.

The Commission’s action is seen as a reaction to the frequent national grid collapses that have seen four nationwide blackouts this year.

The Commission ordered BPE to “incorporate, no later than 31 May 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, be the Nigerian Independent System Operator of Nigeria Limited (“NISO”). ii. The object clause of the Memorandum of Association of the NISO as provided in section 1 6(2) of EA shall be as follows a. to hold and manage all assets and liabilities pertaining to market and system operation on behalf of market participants and consumer groups or such stakeholders as the Commission
may specify; b. to carry out all market and system operation-related contractual rights and obligations novated to it by the Transmission Company of Nigeria;

“c. to negotiate and enter into contract for the procurement of ancillary services with independent power producers, successor generation licensees, etc and generally carryout market and system operations functions as specified under the EA and the terms of its licence in the interest of market participants and system users; d. to carry out all market and system operation-related contractual rights and obligations novated to it by the Transmission Company of Nigeria; the income and property transferred to it by the TCN or whensoever derived shall be applied solely towards the promotion of its objects as set forth in its incorporation documents and no portion thereof shall be paid or transferred directly or indirectly by way of dividend, or bonus otherwise howsoever, by way of profit to the subscribers: provided that nothing herein contained shall prevent the payment in good faith of remuneration to any contractor or staff of the company in return for any services rendered to the Company”.

The Commission said the NISO’s initial subscribers shall be the Bureau of Public Enterprises and Ministry of Finance Incorporated (MOFI) while the final shareholding structure of NISO shall be determined after further consultations with government, market participants and industry stakeholders.