NERC Unbundles TCN, Establishes New Independent System Operator


By Sunday Etuka, Abuja

The Nigerian Electricity Regulatory Commission (NERC) has unbundled the Transmission Company of Nigeria (TCN) with the establishment of Nigerian Independent System Operator Limited (“NISO”) for the Nigerian Electricity Supply Industry (NESI).

NERC disclosed this in an Order No: NERC/20U/45 signed and issued by the Commission’s Chairman, Engr. Sanusi Garba and Vice Chairman, Musiliu Oseni
on Friday, May 3, 2024.

TCN as a successor company was issued 2 (two) separate licences to operate as the transmission service provider and system operator for the national grid system by the Commission.

However, the repealed Electric Power Sector Reform Act 2005 (“EPSRA” or the “Repealed Act”) envisaged that TCN would transfer the function of system operation for the national grid to an Independent System Operator (“ISO”).

The Electricity Act (the “EÅ” or “Act”) which came into effect on 9 June 2023, however, went beyond the Repealed Act by providing clearer guidelines for the incorporation, governance structure and licensing of the ISO, as well as the transfer of the assets and liabilities of the system operations portion of TCN to the ISO.

The Order said, upon incorporation and issuance of an ISO license by the Commission, “the TCN shall transfer to the Independent System Operator (hereinafter called “the “ISO” in this Act), all the assets and liabilities held by the Transmission Company of Nigeria Plc pertaining to its market and system operation functions and the Independent System Operator shall be subject to such powers and duties of an independent System Operator under the terms of its license and the provisions of this Act in relation to market and system operation;

“The TCN shall retain its Transmission Service Provider license and shall be responsible for transmission assets and liabilities and perform such functions as are relevant to the development and maintenance of the power transmission infrastructure in accordance with the terms of its license as may be issued by the Commission and the provisions of this Act.

“The Commission shall, through an order put in place a clear plan and timeline for the transition process… to avoid disruption of industry operations”.

NERC ordered Bureau of Public Enterprises (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.

It said, the name of the company shall, subject to availability at Corporate Affairs Commission, be the Nigerian Independent System Operator Limited (“NISO”).

The Commission, however, noted that the object clause of the Memorandum of Association of the NISO as provided in section 1 6(2) of EA shall be as follows –
“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;

“to carry out all market and system operation-related contractual rights and obligations novated to it by the Transmission Company of Nigeria;

“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 license in the interest of market participants and system users;

“to carry out all market and system operation-related contractual rights and obligations novated to it by the Transmission Company of Nigeria”.

NERC said, the Transfer shall not create any new cause of action in favour of –
a holder of a debt instrument that TCN issued before the Transfer Date; a party to a contract with TCN that was entered into before the Transfer Date.

“This Transfer shall be concluded no later than 31 August 2024 herein referred as z’Completion Date”. TCN shall relinquish its system operation licence to the Commission within 7 days of the Completion Date. Dated this 30th day of April 2024″, it said.

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