Nigerian government mulls TCN’s unbundling, partial concession to boost power supply

The federal government is considering the unbundling and partial concession of the Transmission Company of Nigeria (TCN) to boost its efficiency in the government’s bid to improve power supply.

Director, Energy, Bureau of Public Enterprises (BPE), Mr. Yunana Malo, said during the March edition of “the Electricity Hub” conversation series on power that the National Council on Privatisation (NCP) had directed that a proper strategy should be mapped out for the unbundling of TCN.

He stated that the government believed that all the players in the energy value chain should be able to align with the needs of the power sector seamlessly, adding that the right environment is being created for the transmission component to match generation and distribution.

Malo said data was key to making decisions in the power sector, which needs clear-cut rules for its operations.

He said: “Government has not taken a decision on TCN. We are on the drawing board, looking at all the possibilities. We need to plan and strategise, know what the objectives are; how to attain them and that’s what we are currently doing. The NCP has said that we should look at all the issues.

“Generation is growing and distribution is also becoming incrementally more efficient with the kind of interventions that are going on there. It is this kind of reasoning that made us to say, let us see how the transmission component can even be stronger.

“We are looking at the experiences of other countries and how they have been able to bring in private sector finance into the transmission component in a relatively short period of time and were able to achieve the kind of expansion and reduce levels of redundancy. That is the reason that the government is beginning to think that we should really look at the transmission component.”

He added that there are currently different levels of interventions in the industry with the most formidable and comprehensive being the Presidential Power Initiative (PPI), which is setting up a data management facility.

He stated that unbundling will require firming up the institutions and making sure each one plays the role and responsibilities assigned to it, including the three components of the TCN, namely the System Operator (SO), the Market Operator (MO) and Transmission Service Provider (TSP).

“Maybe it can be compartmentalised with the MO and SO coming together as one institution to be called the Independent System Operator (ISO) while the transmission component, which is highly operational and highly technical, can now be undertaken by another institution,” he added.

While the TSP oversees the development and maintenance of the transmission infrastructure, the SO manages the flow of electricity throughout the power system from generation to distribution companies, while the MO administers the market rules and promotes efficiency in the market.

Malo said Manitoba had previously tried to do the compartmentalisation of the system, but met with frustrations which made it difficult to achieve, leading to the rescinding of the contract by the federal government.

According to him, unbundling the TCN will require the federal government looking at the dynamics of the sector and working to ensure its independence.

“It has been highlighted that TCN takes care of five per cent of the value chain. But that five per cent is very critical. We are in the process of making sure we attain that objective,” he said.

On how to guarantee the independence of the system operator, Malo said the federal government had taken a step in this direction by naming a board, comprising seasoned operators for TCN.

He added that the beginning of real independence would be when tariffs are able to take care of the ISO, which will run like a mini regulator or as the police of the sector, without having to beg for resources.

“Operators will be part and parcel of the management process like having a board with the membership of the operators. TSP will remain government-owned but can be ‘concessioned’ to other operators to manage, to maintain and expand,” he stated.

According to him, the government will bring in those with technical wherewithal as well as the deep pocket to undertake long term projects so that whatever is being done will be in accordance with the guidelines set for the sector.

In his remarks, Power Systems Operations Specialist, Manitoba, Mr. Harold Wiens, urged the government to get a handle on its Available Transmission Capability (ATC) as opposed to the market deals being made.

He identified one of the problems in the country as the high transmission voltage lines going to the North with little load, saying that though the lines will be needed in the future the problem should be rectified in the interim.

On the planned unbundling, he stated that the government has to give the ISO the authority to run the system in real-time and respect the planning of the ISO, adding that none of the entities within the system must be allowed to gain an unfair advantage over the other.

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