Let NISO Be NISO: Why Nigeria’s Electricity Operator Must Be Truly Independent
By Adetayo Adegbemle
The establishment of the Nigerian Independent System Operator (NISO) was one of the most important reforms introduced by the Electricity Act 2023. Officially inaugurated in March 2025, NISO was created to separate the operation of Nigeria’s electricity grid from electricity trading and commercial activities.
The reason for this separation is straightforward: no single organisation can effectively manage both the technical operation of the national grid and the commercial interests of the electricity market without creating conflicts of interest. NISO was expected to operate independently, making technical decisions based solely on grid stability, efficiency, and fairness.
Unfortunately, that independence has not been fully achieved.
The NBET Challenge
The biggest obstacle to NISO’s independence is the continued role of the Nigerian Bulk Electricity Trading Company (NBET).
NBET, a federal government-owned company, was established as a bulk electricity trader and market intermediary. Over the years, however, it has become much more than that. It now plays a central role in electricity settlements, power purchase agreements (PPAs), and financial transactions between generation companies (GenCos) and distribution companies (DisCos).
This creates a fundamental problem.
In every efficient electricity market, the system operator must remain completely neutral. Its responsibility is to decide which power plants generate electricity based on technical and economic considerations. A market trader, on the other hand, is concerned with commercial contracts and financial interests.
When these two functions overlap, or when government institutions continue to influence market decisions, the operator’s independence is compromised.
Why It Matters
NISO is expected to determine which generating plants supply electricity to the national grid. Yet many of these decisions are influenced by legacy contracts managed through NBET, especially those involving government-owned generation companies such as the Niger Delta Power Holding Company (NDPHC).
As a result, dispatch decisions are not always based solely on cost, efficiency or system reliability. Instead, contractual obligations and government interests often influence market outcomes.
The result is a less efficient electricity market and continued poor power supply.
For example, although NDPHC owns more than 5,000MW of installed generation capacity across ten power stations, much of this capacity remains underutilised because of contractual and operational constraints. At the same time, electricity delivered to Nigerians remains far below the country’s actual generation potential.
This is not simply a technical problem; it is largely a market governance problem.
Progress, But Not Enough
Recent reforms have started moving the electricity market in the right direction. Between 2024 and 2025, Nigeria began reducing NBET’s role by encouraging direct bilateral contracts between GenCos and DisCos.
This is a welcome development.
However, as long as NBET continues to occupy a privileged position within the market, NISO cannot function with complete independence.
Partial reform cannot deliver a fully competitive electricity market.
What Must Change
To achieve genuine electricity market reform, four important steps are necessary.
First, NBET should complete its transition out of its current role as the government’s preferred electricity trading intermediary. If government wishes to support strategic assets such as NDPHC, such support should come through transparent budgetary subsidies rather than contractual arrangements that distort market operations.
Second, NISO must enjoy genuine operational and regulatory independence. Its decisions on system dispatch, grid balancing and market operations should be based solely on technical and economic principles—not political considerations or government influence.
Third, electricity trading should become entirely market-driven. Generation companies and distribution companies should negotiate directly under transparent market rules, with NBET participating only as a regulated market participant or exiting the market altogether.
Finally, NISO must have sufficient legal authority, financial independence and operational capacity to enforce its decisions. A system operator that cannot enforce grid rules cannot effectively manage the electricity system.
Why This Reform Cannot Wait
Nigeria’s electricity challenges are well known. Gas supply remains inadequate, transmission capacity is limited, and distribution losses remain high.
These problems will not disappear overnight.
However, within these existing constraints, an independent system operator should be able to maximise available generation, improve dispatch efficiency and ensure that electricity flows to consumers as fairly and efficiently as possible.
That is precisely why NISO was created.
The Electricity Act 2023 laid the legal foundation. The appointment of NISO’s governing board in 2025 established the institutional framework.
The remaining challenge is political.
Government must allow NISO to perform its statutory functions without interference from institutions whose commercial interests may conflict with efficient system operation.
This is not an attack on NBET or its management. Rather, it is an acknowledgement that two government institutions cannot continue to occupy overlapping roles in the electricity market without creating conflicts and inefficiencies.
Nigeria has already taken the bold step of creating an independent system operator. The reform should now be completed by allowing NISO to operate with the autonomy envisioned by the Electricity Act.
Only then can the country begin to build a transparent, competitive and reliable electricity market that supports economic growth, industrial development and improved electricity supply for all Nigerians.
Adetayo Adegbemle is a public affairs analyst, researcher and Convener of PowerUpNigeria, an electricity consumer rights advocacy group based in Lagos.
