Power Minister Reveals Government Plans To Unbundle Transmission Company Of Nigeria

As part of efforts to address the challenges in Nigeria’s electricity supply value chain, The Nigerian Federal goverment has annouced plans to unbundle the Transmission Company of Nigeria (TCN).

Minister of Power, Adebayo Adelabu gave the disclosure during a ministerial retreat in the nation’s federal capital, Abuja .

According to Adelabu , the restructuring must synchronize with the evolving landscape of state electricity markets, addressing calls for the decentralization of the national grid into regional grids interconnected by a new higher voltage national grid.

“The (Nigerian Electricity Supply Industry) NESI transmission sub-sector has been identified as a critical weak point in the value chain lately, a view widely shared. To align with the Electricity Act 2023 and the industry’s demands, it’s time to restructure the Transmission Company of Nigeria (TCN) into two entities: the Independent System Operator (ISO) and the Transmission Service Provider (TSP).

Essentially, we must ask whether the government should directly provide electricity nationwide or rather facilitate its provision.

“Drawing comparisons with China’s centralized model and the US’s diverse access models—like rural cooperatives and State-based utilities with regulatory oversight—presents various considerations. How to handle subsidies, cross-subsidies, and aligning the Rural Electrification Agency’s role with emerging State markets are vital questions that demand stakeholders scrutiny for effective resolution,” the minister said.

The minister explained that government would like to see more utility scale solar power plants by 2030, which brings added responsibility for investments in generation and grid stability to address the variability that transmission of renewable energy generated power over long distances brings.

He noted that over 98 percent of electricity generated in Nigeria currently was through transition fuels which shapes the discourse and activities to be undertaken as Nigeria strive to achieve net zero CO2 emissions by 2060.

For him, this brings with it the need for distributed generation power systems from renewable energy driven power plants, that are localized around clustered communities while at the same time stabilizing the national grid.

“The heart of NESI’s proposed reforms hinges upon securing long-term financing across the entire value chain. While past discussions highlighted concerns about the financial capacities of private sector players from the 2013 privatization, our focus must center on collaborative solutions to alleviate present liquidity challenges.

“Initiating this quest for robust investment involves attracting domestic institutional investors and reputable partners from well-governed sectors within the electricity value chain.

“At this Retreat, we’ve invited established infrastructure financiers and fintech innovators to infuse fresh thinking into our industry, aiming to develop innovative policies enabling capital investment programs and fiscal incentives that elevate the risk profile of sector opportunities to financeable levels.

A notable trend is the emergence of bilateral contracts between Gencos and Discos, alongside the formation of energy investment holding companies integrating generation and distribution assets. Encouraging our Pension Fund Administrators, who collectively wield over N17 trillion, to delve into understanding NESI and fostering bankable strategies for capital infusion is pivotal,” the minister further stated.