Frequent Power Outages: Dangote, NNPCL, Total, and 247 Other Companies Abandon Discos, Produce 6,500MW Independently
Amidst ongoing power outages in Nigeria, around 250 manufacturers and academic institutions have opted out of using the national power grid, choosing instead to generate their own electricity.
These organizations, primarily large-scale electricity consumers, have moved away from relying on the national grid to ensure a stable power supply.
This decision comes in response to high electricity costs, rising fuel prices, frequent grid failures, and disruptions in power lines.
In 2021, former President Olusegun Obasanjo transitioned from the national grid by launching a two-megawatt solar power project at his Presidential Library in Abeokuta, Ogun State, describing the N2 billion investment as highly economical.
Data, particularly from the Nigerian Electricity Regulatory Commission (NERC), reveals that these organizations collectively generate approximately 6,500 megawatts of electricity, surpassing the national grid’s current output of about 4,500 to 5,000 megawatts.
Investigations show that many of these entities received permits from NERC to produce captive power, with approvals dating back to 2010, 2016, 2020, and 2022. The demand for these permits surged further after the signing of the Electricity Act 2023 by President Bola Tinubu.
Captive power permits allow organizations to generate electricity exclusively for their own use, prohibiting them from selling it to others. Some plants rely on gas, while many have adopted renewable sources like solar power.
A major player in captive power generation is the Dangote Group, which produces about 1,500MW for its operations. The Dangote Refinery alone has a 435MW power plant, sufficient to supply the total electricity needs of the Ibadan Electricity Distribution Company.
NERC data indicates that 249 companies and institutions hold permits for captive power generation, producing about 5,180MW. Along with the Dangote Group’s 1,500MW, this brings the total to over 6,500MW.
Examples include Pure Flour Mills in Rivers State generating 546MW, Nigeria LNG with 360MW, and other companies like Lafarge Africa, Total E&P, and Esso Exploration producing substantial power.
Other notable organizations generating power include MTN Nigeria, Shell, Nigerian Breweries, Procter & Gamble, and various universities like the University of Lagos and Bayero University, Kano. The Nigerian Defence Academy recently obtained approval to generate 2.5MW.
Experts warn that the shift to self-generated power by bulk electricity users could harm the power sector, especially the paper industry.
Government Concerns
The Minister of Power, Adebayo Adelabu, has expressed concern about the trend, emphasizing that the national grid is more cost-effective and reliable than captive power. Despite generating over 5,155MW, power distribution companies are unable to utilize all of it due to low consumer confidence and debt recovery challenges.
He noted that captive power generation costs significantly more than grid power, particularly for gas and diesel users, and highlighted efforts to encourage industries to reconnect to the grid by improving trust, reliability, and affordability.
The government aims to achieve 30GW of power by 2030, with 30% coming from renewable sources, as part of its Vision 30-30-30 strategy.
Issues with the Grid
The Nigerian Electricity Regulatory Commission attributes the migration to captive power to frequent voltage fluctuations on the national grid, which have caused damage to industrial equipment and financial losses.
Efforts are being made to stabilize voltage levels and ensure a more reliable power supply to consumers.
Expert Opinions
Adetayo Adegbenle, Executive Director of PowerUp Nigeria, described the situation as alarming, stressing the need to bring companies back to the grid to stabilize it and lower costs. He noted that the grid system depends on a balance between supply and demand, and losing major consumers disrupts this equilibrium.
Kola Olubiyo, President of the Nigeria Consumer Protection Network, highlighted the unreliability of the national grid and its negative impact on production quality and competitiveness. He acknowledged the appeal of off-grid solutions for industries, despite their higher costs.
Both experts agree that reintegrating these bulk users into the grid and encouraging investments are critical to achieving a stable and efficient power sector.