June 18, 2024

NERC initiates unbundling of TCN, establishes Nigerian Independent System Operator

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

According to an Order dated April 30, 2023, jointly signed by NERC Chairman, Sanusi Garba and Vice Chairman Musiliu Oseni, TCN is mandated 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 accordance with the Electric Power Sector Reform Act.

However, the enactment of the Electricity Act 2023 provided clearer guidelines for incorporating and licensing the independent system operator (ISO) and for the transfer of assets and liabilities from TCN’s portion of the ISO.

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

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

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

Additionally, NISO will be tasked with negotiating ancillary service procurement contracts with independent power producers and successor generation licensees, as well as performing other market and system operation functions outlined in its license.

Overall, NERC expects NISO to fulfill all contractual rights and obligations pertaining to market and system operations previously held by TCN.

This move marks a significant step in the restructuring of Nigeria’s electricity sector, aimed at enhancing efficiency and market performance.

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