As the country battles incessant blackouts, about 250 manufacturers and academic institutions have abandoned their respective power distribution companies to generate their own electricity.
The organisations, many of whom are bulk electricity users, shunned the national grid to generate reliable electricity for themselves.
This is coming amid the high cost of electricity, fuel price hikes, incessant grid collapses, and line trippings.
In 2021, former President Olusegun Obasanjo dumped the national grid to unveil a two-megawatts solar power project at the Olusegun Obasanjo Presidential Library, Abeokuta, Ogun State.
The project, which cost about N2bn at that time, was described by the former President as a remarkably cost-effective investment.
Findings from different data sources, particularly from the Nigerian Electricity Regulatory Commission, showed that the firms have generated up to 6,500 megawatts of electricity altogether.
This is higher than the country’s power generation which is currently hovering around 4,500MW and 5,000MW.
Further findings by our correspondent indicated that these outlets got permits from the NERC to generate captive power. Some permits were issued as far back as 2010, 2016, 2020, and 2022.
It was learned that the request for captive power generation increased since 2023, especially after President Bola Tinubu signed the Electricity Act 2023.
Captive power generation permits are issued to entities that intend to own and maintain power plants exclusively for their consumption. That means the entities are not allowed to sell electricity generated from the plant to any third party.
While some of the plants use gas as feedstock, many embrace the use of renewable energy sources like solar.
One of the biggest captive power generators is the Dangote Group.
Dangote Industries Limited has generated about 1,500MW of electricity, according to Aliko Dangote. The Dangote refinery alone has a 435MW power plant that can meet the total power requirement 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.
According to data sourced from NERC, 249 firms and institutions were granted permits to generate captive power.
The quantum of power generated by these organisations is approximately 5,180MW.
When this is added to the 1,500MW generated by the Dangote Group, it would amount to over 6,500MW being generated by the companies and learning institutions.
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 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 and Gamble Nigeria Limited, and Bank of Industry Ltd.
Others 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 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 Nig Plc, among 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 said the abandonment of the national grid by bulk users of electricity could spell doom for the paper sector.
FG laments
The Minister of Power, Adebayo Adelabu, recently decried the rate at which bulk electricity consumers abandon the national grid to generate their own electricity.
Adelabu emphasised that grid connection as a power source is more reliable than captive power plants currently being used by bulk electricity consumers.
He regretted that despite generating over 5,155MW of electricity, the power distribution companies were not taking the power allocated to them to avoid incurring debt due to low recovery.
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, the continued use of captive power rather than grid connection is more expensive.
“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 stated that efforts would be made to encourage the bulk 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,” the minister stated.
Meanwhile, the Nigerian Electricity Regulatory Commission blamed power fluctuations for the migration of bulk users from the national grid.
The regulator in a recent report disclosed that fluctuations in grid voltage, including spikes, dips, flickers, and brownouts, could cause significant harm to consumers and result in substantial commercial losses.
It explained that extreme cases of voltage fluctuations, particularly at the distribution network level cause severe damage to industrial machines, prompting the industries to embrace 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 said it continued to engage with the Transmission Company of Nigeria and other stakeholders to ensure sustained efforts at keeping the system voltage within the limits contained in the grid code and thus providing a safe and reliable electricity supply to end users.
Experts speak
The Executive Director of PowerUp Nigeria, Adetayo Adegbenle, said it was a sad situation that over 200 companies have dumped the national grid.
According to him, these are the companies that should have been serving as “anchor tenants” to ensure the country has a stable grid.
“Many of the grid collapses we have had can easily be also traced to such consumers leaving the grid, making the demand end of the grid less stable. I have also said before that one of the major objectives, if I were to be in charge of the grid, would be to bring these companies back if we truly want to have a stable and cheaper grid supply.
“The national grid system we operate is demand and generation-based. The demands and generation at any point must be equal, to balance the Frequency at 50hz, else frequency variation will be high. Having as many as 200 companies with high capacity demand leave the national grid means that the demand side is heavily dependent on other “mostly residential consumers.
“The whole power sector should be tasked with bringing these companies back, offering incentives. Bringing them back will also ensure that prices can go down on the grid,” Adegbenle said.
On whether the country can generate enough to serve these bulk users of electricity, he said the country still has stranded power not utilised.
“We still have stranded generations, we still have capacities available that they can consume.
Generation companies can easily ramp that up too. The major problem in the power sector is liquidity and the cost-reflective tariff, which has stunted the growth of the sector. No incentive for targeted investments,” he explained.
Adegbenle added that it will be cheaper for the customers “because grid prices will definitely come down.”
Similarly, the President of the Nigeria Consumer Protection Network, Kola Olubiyo, argued that the Nigerian electricity grid has increasingly been frustrating, predictably unreliable, and unstable.
According to him, the incessant line trippings and system collapses have, over the years, made it inevitable for industries involved in the production and manufacturing of goods, who had hitherto depended on the national grid, to think outside the box.
