As Nigeria continues to struggle with frequent blackouts, more than 250 manufacturers and academic institutions have taken drastic measures to abandon their respective power distribution companies and turn to self-generation of electricity. The move, fueled by high electricity costs, rising fuel prices, and frequent grid collapses, highlights the growing disillusionment with the national grid’s unreliability.
These entities, which include major industrial players and universities, have opted to generate their own power through various means, including gas and renewable energy sources like solar. Data from the Nigerian Electricity Regulatory Commission (NERC) reveals that these organizations have generated up to 6,500 megawatts (MW) of electricity, surpassing the current national power generation, which hovers between 4,500MW and 5,000MW.
Among the largest self-powering organizations is the Dangote Group, which generates approximately 1,500MW of electricity, including a 435MW power plant dedicated to its refinery in Ibadan. Other prominent companies with captive power plants include MTN Nigeria, Nigerian Breweries, Total E&P Nigeria, and Lafarge Cement. Some universities, such as the University of Lagos and Obafemi Awolowo University, have also resorted to generating their own power.
This surge in self-generation permits from NERC began in 2023, particularly following the passage of the Electricity Act 2023. Companies have received approval from NERC to generate captive power, primarily for their own consumption, but not for resale to third parties.
Despite the growing trend, the Minister of Power, Adebayo Adelabu, lamented the move, emphasizing that grid connection remains more reliable and cost-effective in the long run. He pointed out that the average cost of producing captive power ranges from N350 to N400 per kilowatt-hour when connected to gas lines, and up to N1,000 per kilowatt-hour when using diesel.
The Nigerian Electricity Regulatory Commission (NERC) attributes the shift to issues with grid voltage, which can cause severe damage to industrial machinery. Such fluctuations, including spikes, dips, and brownouts, have led many bulk electricity users to seek more stable and reliable sources of power.
Experts have expressed concerns about the long-term impact of these departures on the national grid. Adetayo Adegbenle, Executive Director of PowerUp Nigeria, warned that the exit of large power consumers destabilizes the grid, making it even more difficult to achieve the necessary balance of demand and generation. He stressed that efforts must be made to entice these companies back to the national grid, offering incentives and improved reliability.
Meanwhile, Kola Olubiyo, President of the Nigeria Consumer Protection Network, highlighted that the country’s power infrastructure has been increasingly unreliable, forcing manufacturers to seek alternatives despite the high costs associated with off-grid power solutions. He argued that renewable energy is a viable alternative, but the government must reduce taxes on the necessary equipment to make it more accessible to businesses and individuals alike.
While the shift to self-generation helps alleviate the immediate power supply issues for these companies, experts agree that a comprehensive solution to the nation’s power crisis is essential to bring stability and lower costs for all consumers.
