In a sweeping overhaul aimed at redefining Nigeria’s electricity sector, the Nigerian Electricity Regulatory Commission (NERC) has embarked on a transformative journey, unbundling the structure of the Transmission Company of Nigeria (TCN) and ushering in a new era with the establishment of the Nigerian Independent System Operator Limited (NISO).
This groundbreaking development, unveiled through an official order dated April 30, 2023, jointly signed by NERC chairman, Sanusi Garba, and vice chairman, Musiliu Oseni, marks a watershed moment in the nation’s quest for energy sector reform.
At the heart of this monumental shift lies the imperative to enhance operational efficiency and optimize performance within the electricity value chain.
The genesis of this shift can be traced to the guidelines outlined in the Electricity Act 2023, which ushered in a new regulatory framework aimed at fostering transparency, accountability, and sustainability within the sector.
NERC had previously granted Transmission Service Provider (TSP) and System Operations (SO) licenses to TCN, aligning with the Electric Power Sector Reform Act.
However, with the enactment of the Electricity Act 2023 on June 9, clearer directives emerged for the establishment and licensing of the Independent System Operator (ISO), alongside the transfer of assets and liabilities from TCN’s segment of the ISO.
Consequently, in the circular, the commission mandated the Bureau of Public Enterprises (BPE) to duly incorporate, by May 31 without fail, a private company limited by shares under the Companies and Allied Matters Act (CAMA), 2020.
By delineating clear guidelines for the incorporation and licensing of an independent system operator (ISO), as well as delineating the seamless transfer of assets and liabilities from TCN, the legislation laid the groundwork for a seismic shift in the sector’s operational paradigm.
In accordance with NERC’s directive, TCN is mandated to begin the seamless transfer of all market and system operation functions to the newly minted NISO. This transfer of responsibilities meticulously carried out under the watchful gaze of regulatory authorities, heralds a new dawn for the electricity sector. It is expected to enhance transmission performance that has been characterized by inconsistencies.
Echoing the sentiments of regulatory authorities, NERC emphasizes the overarching objectives underpinning NISO’s mandate, as contained in its memorandum of association (MOU).
“The company shall 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,” it said.
Moreover, NISO is empowered to negotiate and enter into contracts for the procurement of ancillary services with independent power producers and successor generation licensees, thus fostering a more dynamic and responsive electricity market.
By assuming the mantle of responsibility for all market and system operation-related contractual rights and obligations handed over by TCN, NISO has emerged as a linchpin in Nigeria’s quest for energy sector reform.
As Nigeria embarks on this transformative journey, Nigerians and stakeholders across the spectrum hold cautious optimism tempered with a sense of urgency. The establishment of NISO is expected to recalibrate the operational dynamics of the electricity sector, helping the nation harness the transformative potential of strategic reforms and regulatory interventions.
