By Ali Elias
In Nigeria’s power sector, the fault lines are no longer just technical — they are economic, political, and existential. More than 200 companies — among them giants like Dangote Industries, Nigerian Breweries, MTN Nigeria, Flour Mills, Lafarge Africa, Airtel, TotalEnergies, and Chevron — have increasingly turned to self-generation of electricity, operating captive power plants with a combined capacity north of 6,000 megawatts (MW). The trend underscores both the ambition and the desperation of businesses operating in a country where the national grid often delivers well under 5,000 MW to a population of over 220 million, despite installed capacity being about 14,000 MW.
In the first quarter of 2025, the Nigerian Electricity Regulatory Commission (NERC) issued 16 new captive-power permits amounting to 952.64 MW, while licenses for mini-grids and other alternative energy projects added another 1,259 MW.
The story is not just numbers. For companies used to unpredictable supply, power outages mean lost production, spoiled inventory, inflated costs. As Mohamad Darwish, CEO of IHS Nigeria, puts it:
“70% of our time is spent on generators, diesel, operations and logistics. If there were a reliable grid, those resources could go into new verticals and innovation.”
That widespread reliance on self-generation is a barometer of distrust — from large industrial users to telecoms firms. Federal and state authorities acknowledge the problem. Adebayo Adelabu, Nigeria’s Minister of Power, says one of his priorities is to deliver stable electricity to commercial and industrial users willing to pay for reliability and quality of service. He noted that many large consumers abandoned the grid years ago, and bringing them back would help spread the fixed costs more evenly and potentially lower tariffs for everyone.
Captive power (a situation where users generate their own power because grid is insufficient, unreliable, or too expensive) plants mostly run on gas or diesel. Thermal plants supply roughly 70% of Nigeria’s electricity but suffer from unreliable gas feedstock and gas priced in ways that discourage steady supply. The sector also wrestles with liquidity problems caused by non-payment.
Nigeria LNG’s CEO, Philip Mshelbila, said that although Nigeria holds reserves exceeding 200 trillion cubic feet of natural gas, production for both domestic power and export remains far below potential. He welcomed recent presidential directives to improve terms for “dry gas” supply, noting that one final investment decision has already been made with two others imminent.
Grid modernization is also on the agenda: After experiencing a dozen grid collapses last year, the federal government is rolling out a national supervisory control and data acquisition (SCADA) system with World Bank backing. Power minister Adelabu says it should be operational within 12 to 18 months. Alongside this, ambitious projects such as eastern and western 330kV supergrid backbones and “looped” line designs aim to isolate faults and prevent widespread outages. Nearly US$2 billion is earmarked for transmission upgrades.
But power sector reforms do not lie in technology alone. Issues of revenue leakage, consumer non-payment, technical and commercial losses (ATC&C losses), and cost reflective tariffs are front and centre. In Q1 2025, DisCos billed about N744.27 billion, but collected only N553.63 billion, yielding a collection efficiency of 74.39%, lower than the preceding quarter.
Losses in the system — technical faults, billing discrepancies, theft — remain high, and tariffs are not yet fully cost reflective. This has placed significant strain on government subsidies.
Industries that rely on 24/7 power have been particularly hard hit. Manufacturing plants shut down or scaled back, perishable goods spoil, and small businesses bleed profit margins on fuel and generator maintenance. The technology sector and telecoms weigh the cost of embedded power into every strategic decision.
And yet, despite these pressures, many consumers remain disconnected or partially connected — paying for power they seldom reliably use. Households in both urban and peri-urban areas spend more than they should on self help solutions: inverters, solar panels, diesel generators.
Nigeria’s power paradox is stark: abundant natural resources, high installed capacity, and vibrant demand, yet persistent supply failures that force self generation to become the norm rather than the exception.
If captives and mini-grids are to be complements — not substitutes — they must dovetail with a renewed investment in the grid: reliable gas supply chains, cost reflective pricing, modern infrastructure, more competent regulation, and enforced accountability.
The government’s promises of upgrading transmission, rolling out SCADA, and reforming policy frameworks are encouraging. But promises are cold comfort where children study by torchlight, factories lie idle, and millions pay for power they can’t trust.
Unless the regulatory bodies — especially NERC and the Transmission Company of Nigeria (TCN) — act decisively, and unless political will translates into budgetary discipline, then Nigeria may be building a dual system: one for those who can afford captive power, and one for everyone else left in the dark.
For Nigeria’s industrial competitiveness, consumer welfare, and economic dignity, the question now is simple: will electricity become a right accessible to all, or remain a luxury purchased at high cost by those who can no longer wait?