PART IV - INCORPORATION AND LICENSING OF ISO

Part IV of the Electricity Act 2023 comprises sections 15 through 32. It highlights the essential steps and responsibilities for establishing and implementing an Independent System Operator (ISO) within Nigeria's electricity market framework. The highlights stress the legal, operational, and governance structures necessary to transition to an ISO, ensuring a smooth operation within Nigeria’s electricity market. Key highlights include:

1. ISO Incorporation: TCN will establish an ISO under the Commission's guidance, following the Companies and Allied Matters Act.

2. Asset and Liability Transfer: TCN will transfer assets and liabilities related to market and system operations to the ISO, while retaining transmission service provider responsibilities.

3. Transition Plan: The Commission will create a detailed plan and timeline to ensure a smooth transition process, avoiding industry disruptions.

4. ISO Objectives: The ISO will manage assets and liabilities for market operations, fulfill contractual obligations, and negotiate ancillary services contracts.

5. Operational Powers: The ISO is empowered to seek technical support for its functions and execute its license duties.

6. Transfer Orders: Specific orders will guide the transfer of employees, assets, and contracts from TCN to the ISO, ensuring compliance and continuity.

7. Land Transfer Validation: Land transfers documented in agreements will serve as conclusive evidence of the transfer under the ISO framework.

8. ISO Legal Rights and Obligations: The ISO can enforce or defend rights and obligations originally held by TCN. Ongoing legal matters related to transferred interests can continue under the ISO.

9. Protection Against Legal Actions: Legal protections ensure that the asset and liability transfer to the ISO does not constitute breaches or terminations of existing contracts and obligations, except for specified contracts by regulation.

10. Release of TCN from Liabilities: Once assets and liabilities are transferred to the ISO, TCN is released from these obligations.

11. Guarantor Liabilities: Guarantees made by TCN remain effective after the transfer, applying to the ISO.

12. Transfer of Documents: TCN must supply copies of relevant records to the ISO.

13. Amendments to Transfer Orders: The Commission can amend transfer orders within a year as needed, including after audits of ISO's responsibilities.

14. Employee Terms of Service: Transferred employees retain their employment terms and entitlements. Contributions to pension schemes continue.

15. Exemption from Taxes: Stamp duty and capital gains tax are exempted for transactions made under this part.

16. Corporate Governance and Board Composition: The ISO adheres to the National Code of Corporate Governance. Its Board includes experienced professionals, with nominations made by an independent committee.

17. Land Protection: Land vested in the ISO cannot be acquired without the Minister’s consent, and activities on such land require similar approval.