The Nigerian power sector has undergone a significant restructuring with the unbundling of the Transmission Company of Nigeria (TCN) into two distinct entities: the Nigeria Independent System Operator (NISO) and the Transmission Service Provider (TSP). This move, driven by the Electricity Act 2023, signifies a crucial step towards enhancing operational clarity, transparency, and ultimately, value creation through strengthened corporate governance. Minister of Power, Chief Adebayo Adelabu, emphasized that this unbundling isn’t merely an administrative change, but rather a significant structural reform reflective of the ministry’s commitment to a more efficient and transparent power sector. This restructuring demonstrates the government’s recognition of the need to adapt to the dynamic complexities of the nation’s economy and the growing demand for improved service delivery in the power sector.
The NISO will be responsible for the real-time balancing of electricity supply and demand across the national grid, ensuring stability and responsiveness to fluctuating energy needs. This involves constant monitoring and adjustment of power flow to maintain a delicate equilibrium between supply and demand, preventing blackouts and ensuring a reliable power supply. The TSP, on the other hand, will focus on the maintenance and expansion of the physical transmission infrastructure, including the network of high-voltage power lines and substations that transport electricity across the country. This involves ensuring the reliability and efficiency of the existing infrastructure, as well as investing in upgrades and expansion to meet the increasing demand for electricity. The separation of these two crucial functions aims to streamline operations, enhance specialization, and promote accountability within each entity.
The decision to unbundle the TCN stems from the understanding that effective operation requires a clear delineation of responsibilities and specialized expertise. By creating two separate entities with distinct mandates, the government aims to improve efficiency, transparency, and accountability within the power sector. The NISO, focusing on system operation, requires a different skill set and operational approach compared to the TSP, which deals with infrastructure management. This separation allows each entity to focus on its core competencies, leading to improved performance and better service delivery.
The importance of robust corporate governance in these newly formed entities cannot be overstated. It serves as a cornerstone for operational excellence, investor confidence, regulatory compliance, and the protection of public interest. For both the NISO and TSP, adherence to strong corporate governance principles will be crucial for attracting investment, maintaining financial sustainability, and ensuring that their operations are aligned with national development goals. Good governance practices will promote transparency and accountability, fostering trust among stakeholders and ensuring that public resources are utilized effectively.
The Minister of Power commended the Ministry of Finance Incorporated (MOFI) for its leadership in repositioning the Federal Government’s asset management function and prioritizing governance across all Federal Government-owned enterprises. The launch of the Corporate Governance Scorecard and the initial pilot assessment represent important steps towards fostering a culture of performance and transparency within the public enterprise landscape. The Ministry of Power has pledged to align its efforts with MOFI’s initiatives and institutionalize sound governance practices across all entities under its purview. This collaborative approach aims to ensure that the governance frameworks of the NISO, TSP, and other power sector entities are clear, functional, and fit for purpose.
The unbundling of the TCN and the emphasis on corporate governance represent a paradigm shift in the Nigerian power sector. This move is not merely a structural adjustment but a strategic commitment to creating a more efficient, transparent, and sustainable power sector. By fostering a culture of accountability, performance, and adherence to best practices, the government aims to attract investment, improve service delivery, and ultimately, drive national development. The Ministry of Power recognizes that good corporate governance is not an optional extra, but a fundamental necessity for achieving national competitiveness, financial sustainability, and inclusive service delivery in the power sector.
