Amid persistent blackouts, around 250 manufacturers and academic institutions have decided to sever ties with their respective power distribution companies and generate their own electricity.
Many of these organizations, which are major electricity consumers, have turned to self-generation to secure a reliable power supply.
This shift comes in the wake of rising electricity costs, fuel price increases, frequent grid collapses, and line trippings.
In 2021, former President Olusegun Obasanjo took a similar step, abandoning the national grid to launch a two-megawatt solar power project at the Olusegun Obasanjo Presidential Library in Abeokuta, Ogun State.
The project, which was valued at around N2 billion at the time, was hailed by former President Obasanjo as a highly cost-effective investment.
According to data from various sources, particularly the Nigerian Electricity Regulatory Commission, these firms have collectively generated up to 6,500 megawatts of electricity.
This figure exceeds the country’s current power generation, which is around 4,500MW to 5,000MW.
It was further gathered that these organizations obtained permits from NERC to generate captive power.
Some of these permits were issued as early as 2010, with others granted in 2016, 2020, and 2022.
The demand for captive power generation has surged since 2023, particularly following President Bola Tinubu’s signing of the Electricity Act 2023.
Captive power generation permits are granted to entities that plan to build and operate power plants solely for their own use. These entities are prohibited from selling the electricity produced to third parties.
While some of these plants rely on gas as their primary fuel, many have turned to renewable energy sources such as solar power.
One of the biggest captive power generators is the Dangote Group.
According to Aliko Dangote, Dangote Industries Limited has generated approximately 1,500MW of electricity.
The Dangote refinery itself operates a 435MW power plant, which is capable of meeting the entire power demand of the Ibadan Electricity Distribution Company.
“We don’t put pressure on the grid. We produce about 1,500 megawatts of power for self-consumption,” Aliko Dangote said last year at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas.
Data from NERC reveals that 249 firms and institutions have been granted permits to generate captive power. These organizations collectively generate around 5,180MW of electricity.
When the 1,500MW generated by the Dangote Group is added to the 5,180MW produced by the 249 firms and institutions, the total power generated by these companies and educational institutions exceeds 6,500MW.
According to NERC, Pure Flour Mills Limited in Rivers State got a permit to generate 546MW of electricity while Nigeria LNG generates 360MW.
United Cement Company of Nigeria Limited (Lafarge Africa Limited) generates 105MW; Total E & P Nigeria Limited, 174MW; Esso Exploration & Production Nigeria Limited, 76MW; First Global Commerce Solutions Limited, 77MW; Flour Mills of Nigeria Plc, 70MW; and Lafarge Cement Wapco Nigeria Plc, 90MW.
Some of the companies involved in captive power generation include MTN Nigeria, the Nigerian National Petroleum Company Limited, Shell, Nigerian Breweries Plc, Flour Mills of Nigeria Plc, Mobil Producing Nigeria Unlimited, Kaduna Refinery, Warri Refinery, Lafarge Cement Wapco Nigeria Plc, Procter & Gamble Nigeria Limited, and the Bank of Industry Ltd.
Other companies involved in captive power generation include Seven-Up Bottling Company Plc, First Bank of Nigeria Plc, Dangote Cement Plc, Lekki Port LFTZ Enterprise Limited, Guinness Nigeria Plc, Chevron Nigeria Limited, Nestle Nigeria Plc, Total Upstream Nigeria Limited, Aluminium Smelter Company of Nigeria, De-United Foods Industries Limited, Sagamu Steel Nigeria Limited, British American Tobacco Nigeria Limited, Unilever Nigeria Plc, Total E & P Nigeria Limited, and Mikano International Limited.
They also include the Federal Airports Authority of Nigeria, Airtel Networks Limited, Nogap Power Development Company Limited, Shell Exploration & Production Company Limited, Esso Exploration & Production Nigeria Limited (Usan OML 138), Indorama Eleme Petrochemicals Limited, Cadbury Nigeria Plc, Honeywell Flour Mills, Atlantic International Limited Refinery & Petrochemical Limited, Julius Berger Nigeria Plc, Okamu Oil Palm Company, PZ Cusson Nigeria Plc, and several others.
Among the universities with captive power are the University of Lagos, Abubakar Tafawa Balewa University, Federal University Ndufu-Alike IKWO, Usmanu Danfodiyo University, Obafemi Awolowo University, Federal University of Petroleum Resources, Nnamdi Azikiwe University, Awka, Federal University of Agriculture, Makurdi, Bayero University, Kano, and University of Benin.
Others include University of Abuja, University of Calabar & Teaching Hospital, Cross River State, University of Agriculture Micheal Okpara, Umetuke, Abia State, University of Maiduguri & Teaching Hospital, Borno State, Federal University of Agriculture, Abeokuta Main Campus, Ogun State, and the Federal University Gashuwa, Yobe State.
The Nigerian Defence Academy, a military university based in Kaduna recently got NERC’s nod to generate 2.50MW of electricity.
Experts have cautioned that the departure of major electricity users from the national grid could negatively impact the paper sector.
The Minister of Power, Adebayo Adelabu,
recently expressed concern over the increasing number of bulk electricity consumers disconnecting from the national grid to generate their own power.
He stressed that grid connection remains a more reliable source of electricity compared to the captive power plants currently used by these consumers.
Adelabu lamented that despite generating over 5,155MW of electricity, power distribution companies were not utilizing the power allocated to them, opting instead to avoid incurring debt due to poor recovery rates.
He said, “The majority of bulk electricity users, such as industries, are off the grid due to a lack of trust and confidence in the past. They now have their own captive power plants in their industries, which is more expensive.”
According to him, relying on captive power instead of grid connection is more costly in the long run.
“The average cost of producing captive power is about N350 to N400 per kilowatt-hour for those connected to gas lines. For diesel it’s about N950 or N1,000,” he said.
He mentioned that efforts would be made to persuade bulk electricity users to return to the national grid.
“Once consumers and industries see the trust, the confidence, and the stability we are giving, they would be encouraged and reconnect to the grid for a cheaper source of power.
“We aim to attain the threshold of a new era in power delivery. The Federal Government is still focused on Vision 30-30-30. By 2030, we aim to achieve 30GW in the medium term, with renewable energy constituting 30 per cent and universal access in the long term. We must align on the principles guiding our activities and the strategies,” Adelabu stated.
However, the Nigerian Electricity Regulatory Commission attributed the migration of bulk users from the national grid to power fluctuations.
In a recent report, the regulator highlighted that issues such as voltage spikes, dips, flickers, and brownouts could severely damage equipment and lead to significant commercial losses.
It explained that extreme voltage fluctuations, especially at the distribution network level, can cause considerable harm to industrial machinery, prompting many industries to turn to captive power generation.
“To guarantee the quality of electricity delivered to end users, the Grid Code specifies a nominal system voltage of 330kV with a tolerance range of ±5 per cent (313.50kV to 346.50kV in the lower and upper bounds respectively).
“Fluctuations in grid voltage, including spikes, dips, flickers, and brownouts, can cause significant harm to consumers and result in substantial commercial losses. Extreme cases of voltage fluctuations, particularly at the distribution network level can cause severe damage to industrial machines, thereby compelling the industrial customers to seek alternative sources of power outside of the national grid,” the regulator confirmed.
The commission stated that it was actively engaging with the Transmission Company of Nigeria and other stakeholders to ensure continued efforts in maintaining system voltage within the limits set by the grid code, thereby ensuring a safe and reliable electricity supply for end users.
