Dangote, NNPCL, MTN, 247 firms abandon national grid to generate their own electricity

Approximately 250 manufacturers and academic institutions in Nigeria have abandoned the national power grid to generate their own electricity, citing high electricity costs, fuel price hikes, persistent grid collapses, and frequent power fluctuations.

These bulk electricity users have increasingly turned to captive power generation, producing a collective total of about 6,500 megawatts (MW), significantly surpassing the national grid’s output of 4,500–5,000MW.

Notable examples include the Dangote Group, which generates 1,500MW of electricity, with its refinery alone producing 435MW—enough to power the Ibadan Electricity Distribution Company. Other entities, such as Pure Flour Mills Limited (546MW) and Nigeria LNG (360MW), also generate substantial electricity. Many of these companies, including MTN Nigeria, Lafarge Africa Limited, and Nigerian Breweries, have adopted renewable energy sources like solar, while others rely on gas.

The trend toward captive power generation accelerated following the enactment of the Electricity Act 2023, which streamlined permits for self-generation. Captive power permits, issued by the Nigerian Electricity Regulatory Commission, NERC, allow entities to produce electricity exclusively for their consumption. Some of these permits date back to 2010, but requests surged in 2023 as more organizations sought reliable power alternatives.

Universities have also embraced captive power. Institutions such as the University of Lagos, Obafemi Awolowo University, and the Nigerian Defence Academy have established their own power plants, improving energy reliability on campuses. This shift reflects widespread dissatisfaction with the national grid’s reliability, particularly among industries that face significant financial losses due to power disruptions and voltage fluctuations, which damage industrial machinery.

Despite these advancements, government officials have expressed concerns about the long-term implications. Power Minister Adebayo Adelabu decried the exodus of bulk electricity consumers from the grid, highlighting its negative impact on the power sector’s revenue. He emphasized that grid-based electricity remains more cost-effective, with captive power costs ranging between ₦350–₦1,000 per kilowatt-hour depending on the energy source.

The NERC attributed the migration to voltage fluctuations on the grid, which cause spikes, dips, and brownouts, damaging industrial equipment and reducing trust in the grid. Efforts are ongoing to stabilize the grid and restore consumer confidence. The Federal Government aims to achieve 30 gigawatts, GW, of electricity generation by 2030, with 30% derived from renewable energy sources under its Vision 30-30-30 initiative.

Stakeholders are exploring strategies to encourage industries to reconnect to the grid, citing the potential for more affordable and stable power delivery in the future. Meanwhile, the rise of captive power generation underscores the need for urgent reforms to ensure the grid’s reliability, boost investor confidence, and reduce the financial burden on bulk electricity users.