Minister Adelabu Laments as Bulk Customers Abandon National Grid for Self-Generated Power.
During a recent retreat of the Nigeria Electricity Liability Management Company board in Lagos, the Minister of Power, Adebayo Adelabu, expressed concern over the growing trend of Nigerian manufacturers, industries, and other bulk electricity consumers abandoning the national grid in favor of generating their own power. This shift, he noted, stems from a lack of trust and confidence in the national grid’s reliability, despite efforts to improve the country’s power supply.
Adelabu highlighted that these bulk users have resorted to using captive power plants within their industries. Although this allows them to have more control over their energy supply, the minister pointed out that this method is significantly more expensive than sourcing power from the national grid. According to Adelabu, the cost of generating electricity through captive power plants is steep: for those connected to gas lines, the average cost is around N350 to N400 per kilowatt-hour. For diesel, it climbs to approximately N950 per kilowatt-hour, and for petrol, it’s about N550 per kilowatt-hour. In contrast, the national grid offers a more viable and cost-effective solution, particularly as the government works to enhance its stability and reliability.
The minister lamented that, despite the national grid’s achievement of generating a record 5,155 megawatts in July, much of this electricity is not being utilized due to ongoing distribution challenges. He acknowledged the need to rebuild trust and confidence among these bulk consumers, emphasizing that once the grid’s reliability is demonstrated, industries and manufacturers would be more inclined to reconnect for a cheaper and more sustainable source of power.
Adelabu outlined the government’s ambitious plans to improve power delivery in Nigeria. In the short term, the target is to reach 6 gigawatts of power by the end of December 2024. In the medium term, the Federal Government remains committed to Vision 30-30-30, aiming to achieve 30 gigawatts of power by 2030, with 30% of that coming from renewable energy sources. The ultimate goal is to ensure universal access to electricity across the country.
To achieve these objectives, the government is employing a multi-pronged approach. One of the strategies being considered is the introduction of differential tariffs during off-peak periods to stimulate demand. Adelabu noted that there has been a noticeable drop in demand during these periods, and adjusting tariffs could encourage more consumption, particularly with the implementation of smart meters.
In addition to addressing the technical and financial challenges, the minister urged the board members and players in the power sector to adopt and adhere to strong corporate governance standards. He emphasized the importance of transparency, accountability, and integrity in managing the Nigeria Electricity Supply Industry’s liabilities and ensuring sustainable growth in the sector. Adelabu also stressed the need for embracing Environmental, Social, and Governance (ESG) standards as part of their operational practices. He highlighted that these considerations are no longer optional but are integral to every corporate operation, contributing to Nigeria’s broader climate and social equity goals.
The minister’s remarks come against the backdrop of a significant electricity tariff hike introduced in April 2024, which saw a 240% increase for Band A customers receiving at least 20 hours of power supply daily. This hike has led to a substantial rise in energy costs for manufacturers, industries, and the general populace, further complicating the energy landscape in Nigeria. Adelabu’s statements underscore the urgent need for systemic reforms and innovations in the power sector to regain consumer trust and stabilize the national grid.
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