How NERC’s delay in unbundling TCN heightens risk of grid collapse

THE  Nigerian Electricity Regulatory Commission (NERC)’s failure to unbundle the Transmission Company of Nigeria (TCN) has increased the risk of collapse of the electricity grid, findings by the ICIR  have shown.

Presently, the TCN performs the dual role of a market and a systems operator, which does not allow for proper checks and balances. It also does not give room for appropriating sanctions on distribution companies rejecting load transmission. Findings have shown that load rejection puts intense pressure on grid capacity, causing persistent grid collapses. More so, the collapses have seen the country thrown into avoidable darkness, while jeopardising several economic activities.

“The issue of unbundling of the TCN is NERC’s responsibility as prescribed by the Act. We are currently losing a lot without unbundling the TCN. The day you open up TCN for proper unbundling, you would solve the problem of dilapidated infrastructure as people would build their own independent transmission. Investors would come in and build their own transmission,” said a Power Sector Governance Expert Chuks Nwani.

Read Also: NERC mulls hike in electricity tariff, seeks to conclude extraordinary review for DisCos

He noted that the second consequence of the failure of unbundling was that the system operator and market operator were not yet functioning independently to ensure proper monitoring. He argued that no one was sanctioning any infraction since the TCN performed both functions, albeit not independently.

“This not good for the system, as you could see the distribution companies trade blames with the TCN once there’s a grid collapse issue. I know that discussions are currently going on for the loan for the network improvement of the TCN at the CBN. I know that discussions are currently going on, but not yet concluded on that.”

The NERC unfolded plans to unbundle the TCN in 2020, a move that was described by analysts  as a positive step towards improving the power sector post- privatisation through a system that defines separate roles for the market operator and the system operator independently.

The slow pace of the TCN unbundling, however, has kept energy consumers craving almost endlessly for an efficiently-run power sector market devoid of persistent grid collapse. It has also discouraged investors from the transmission arm of the power sector.

Most notably, the TCN manages the electricity transmission network in the country and is fully owned and operated by the government.

It is one of the 18 companies that was unbundled from the defunct Power Holding Company of Nigeria(PHCN). The TCN is responsible for evacuating electric power generated by the electricity generating companies(GENCOS) and wheeling it to distribution companies (DISCOS).



    In 2019 alone, for instance, the national electricity grid recorded 11 collapses , causing power failures across the country with its corresponding effect on socio-economic activities. Also in 2020, the national grid recorded collapses in January and May. The national grid also recorded partial collapse in February 2021 .

    “The main challenge for the Nigerian government in making TCN efficient is how it can allow the corporation to be a fully regulated entity,”  a former Chairman of the Nigerian Electricity Regulatory Commission Sam Amadi told The ICIR.

    It continues to treat TCN as a parastatal or agency of the Ministry of Power. No,  it is not. At a point, I had to force government to put an independent director in line with NERC’s fit and proper regulations. At the end, instead of an independent professional, government put a former governor as an independent director, thereby destroying the essence of independent directorship.”

    Energy analysts are, however, optimistic that the gradual unbundling of the TCN would address key problems in the power sector, stressing that structural reform involving the separation of core functions of power utilities would drive efficiency in the privatised power sector market.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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