NERC separates TCN and orders establishment of new company for system operations

The Nigerian Electricity Regulatory Commission (NERC), acting in accordance with the provisions of the Nigerian Electricity Act, has ordered the establishment of an Independent System Operator (ISO) to undertake the market and system operations functions of the Transmission Company of Nigeria (TCN).

This was revealed in a NERC order signed by the chairman and vice-chairman of the Transmission Company of Nigeria (TCN). The order established that upon incorporation of the new entity, the TCN should transfer its system operating license, its assets and liabilities.

According to the order, TCN will retain its transmission service provider license and continue to maintain power transmission infrastructure throughout the country.

He also specified that the Bureau of Public Companies (BPE) will establish the new company no later than the 31st.street May 2024, which would be called the Nigerian Independent System Operator of Nigeria Limited (“NISO”).

He declared,

• “BPE shall establish, no later than May 31, 2024, a private company limited by shares under the Companies and Allied Matters Law to carry out the system and market operation functions stipulated in the EA and the terms and conditions of the system operation license issued to TCN.”
• “TCN will complete the identification and mapping of assets and liabilities for the system/market operation part of its business and submit them to the Commission and the BPE no later than June 30, 2024.”
• “BPE, through the National Privatization Council, will conclude the transfer of all market and system operating assets and liabilities held by TCN to NISO (“Transfer”)”

Shareholding structure and transfer completion schedule

He noted that the shareholder subscribers of the new company will be the Ministry of Finance Incorporated (MOFI) and the Bureau of Public Enterprises (BPE), but the final shareholding structure will be subject to further consultations with the government and other stakeholders.

Furthermore, the NERC ordered that the transfer of assets and liabilities of the TCN to the new company should be completed no later than 31street August 2024 as the TCN must renounce its system operator license no later than 7 days after the incorporation of the NISO.

What you should know

• The Federal Government had earlier revealed its intention to separate the Transmission Company of Nigeria (TCN) in a bid to improve the power sector. The defunct Electric Power Sector Reform Act, 2005 (“EPSRA”) had provided for the transfer of power from the TCN to function as a system operator to an Independent System Operator (ISO), but no clear guidelines were provided for its establishment.
• The New Electricity Law has provided a clear path for the creation of the ISO and how the TCN will transfer the system operation functions to it. Through this order, NERC, as the apex regulator of the power sector, is activating the provisions of the Electricity Act in this regard.
• Until this order, the TCN has had two licenses: one as a transmission service provider and another as a system operator. The establishment of the NOSI will leave the TCN with only one role: that of a transmission service provider only.