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By Adewale Sanyaolu
The Federal Government has expressed grave concerns over the growing trend of manufacturers and industries abandoning the national grid in favour of captive power solutions, driven by a profound loss of confidence in the reliability of the national grid. This was disclosed by the Minister of Power, Mr. Adebayo Adelabu, during a board retreat of the Nigeria Electricity Liability Management Company (NELMCO) held in Lagos at the weekend.
The Minister expressed deep concern that, despite achieving a record generation of 5,155 megawatts of electricity, much of this capacity remains unutilised due to the exodus of bulk electricity users, particularly in the industrial sector, from the grid.
“The majority of large-scale electricity consumers, such as industries, have disconnected from the grid due to past failures in reliability. They have turned to their own captive power plants, which are significantly more costly,” he lamented.
Adelabu emphasised the inherent advantages of grid connection as a more cost-effective and reliable power source compared to captive power plants. He highlighted that the average cost of generating electricity through captive power ranges from N350 to N400 per kilowatt-hour for those connected to gas lines, while the cost escalates to N950 per kilowatt-hour for diesel and N550 per kilowatt-hour for petrol.
In a bid to restore confidence and encourage industries to reconnect to the grid, the Minister outlined the Federal Government’s commitment to improving the reliability and stability of grid power.
“Once consumers and industries see the trust, the confidence, and the stability we are building, they will be encouraged to return to the grid for a more affordable power source,” he stated.
Looking ahead, the Minister set ambitious targets for the power sector, aiming to reach a grid capacity of 6,000 megawatts by the end of December 2024. He reaffirmed the Federal Government’s commitment to its Vision 30-30-30, which envisions achieving 30 gigawatts of power generation by 2030, with 30% of that capacity coming from renewable energy sources. “In the short term, we aim to reach 6 gigawatts, while our medium-term goal is to attain 30 gigawatts by 2030, with a significant contribution from renewables. This vision aligns with our broader objective of ensuring universal access to electricity in the long term,” he explained.
To achieve these targets, Mr. Adelabu outlined a multi-pronged approach, including the introduction of differential tariffs during off-peak periods to stimulate demand. “We have observed a decline in demand during off-peak hours, and to address this, we plan to introduce a different tariff structure during these periods, particularly with the deployment of smart meters,” he noted.
The Minister also called on the NELMCO Board to embed corporate governance principles in their efforts to drive sustainable growth in the power sector. “As we manage the liabilities of the Nigeria Electricity Supply Industry (NESI), it is crucial that we uphold the highest standards of transparency, accountability, and integrity. Our actions must always align with the principles that safeguard public interests, ensuring that trust is maintained and strengthened across the board,” he emphasized.
Additionally, Mr. Adelabu urged the power sector to embrace Environmental, Social, and Governance (ESG) standards as a core aspect of their operations. “In today’s world, ESG considerations are not optional; they are integral to every corporate operation. NELMCO’s role extends beyond managing financial liabilities—we are also stewards of social and environmental responsibilities. We must incorporate sustainable practices into our strategies to contribute to Nigeria’s broader goals of achieving its climate ambitions and fostering social equity.
This commitment to ESG will not only enhance our reputation but also ensure long-term value creation for all Nigerians,” he stated.
The Minister further stressed the importance of addressing the tariff shortfalls in the NESI through innovative and sustainable financing solutions. “To tackle the tariff shortfall in the NESI, we need to explore creative and sustainable financing strategies. It’s imperative that we balance efforts to address existing obligations with long-term strategies that pave the way for a financially solvent sector through cost-reflective tariffs. Our focus must be on stabilizing the electricity market, attracting investment, and ensuring that every Nigerian has access to reliable and affordable power, which is essential for driving the nation’s economic development,” he said.
He highlighted the need for effective leadership and agility within the electricity industry. “As leaders, our primary role is to set a strategic course, inspire our teams, and navigate challenges with foresight. We must be proactive and adaptable, ready to pivot in response to disruptions, whether technological, regulatory, or economic. A culture of continuous learning, open communication, and innovation will ensure that we not only survive but thrive in an ever-changing environment,” he concluded.
