Nigeria’s power crisis is quietly reshaping how businesses survive, as 20 more companies walked away from the national grid in the third quarter of 2025.
Nigeria’s electricity regulator says the firms secured captive power generation permits that allow them to produce a combined 5.85 megawatts solely for internal use, underscoring growing frustration with unreliable grid supply. The companies opted for licences above one megawatt, a move that signals how energy insecurity is now influencing core business decisions, especially for manufacturers and large commercial operators.
In its latest quarterly report, the regulator noted that electricity distribution companies billed customers N706.61 billion between July and September but collected only N570.25 billion, translating to a collection efficiency of 80.7 per cent. While this marked an improvement from previous quarters, consumers continued to experience frequent outages, voltage instability and service quality concerns.
The report also highlighted rising bilateral power transactions, where electricity producers sold power directly to customers without passing through the grid. These deals generated $7.12 million and N3.19 billion during the quarter, reinforcing a growing shift away from the traditional electricity market structure.
Liquidity challenges remain a major concern. The regulator warned that unpaid obligations, including more than N1 billion owed by special customers to the bulk trader, continue to weaken market stability. Unlike grid-dependent supply, captive power projects operate independently of these financial bottlenecks, making them increasingly attractive to businesses seeking cost certainty and operational control.
Licensed off-grid and captive power capacity in Nigeria has now exceeded 6,500 megawatts, according to recent estimates. The regulator said it deliberately issued multiple captive permits in the quarter to strengthen industrial energy security in line with the Electricity Act.
Despite revenue gains by distribution companies, deeper structural issues persist. Although the grid avoided a total collapse during the quarter, system operations were still affected by frequent voltage and frequency deviations. Gas supply constraints alone reduced power generation by 602 gigawatt-hours, pushing even more firms toward self-generation.
For small and medium-sized businesses, the implications are mixed. While large firms increasingly deploy captive power, smaller enterprises often lack the capital to do so, leaving them exposed to outages and rising operating costs. This gap continues to widen productivity differences across sectors.
Government subsidies remain central to keeping the power sector afloat. Electricity subsidies accounted for nearly 59 per cent of total generation invoices in the quarter, with the Federal Government paying N458.75 billion. Although this figure declined from the previous quarter due to lower energy offtake and marginally reduced generation costs, tariffs for some customers have remained frozen at mid-2024 levels despite inflationary pressures.
The Billing efficiency improved to 82.69 per cent, and collection efficiency rose to 80.7 per cent, but cumulative billing losses still stood at nearly N148 billion. The regulator pointed to poor metering, customer dissatisfaction and unwillingness to pay as persistent challenges to revenue recovery.
On bilateral transactions, international customers paid just over $7 million out of nearly $19 million invoiced, while domestic customers settled most of their bills. The regulator stressed that timely settlement of upstream obligations is critical to sustaining generation and transmission.
The steady migration to captive power highlights Nigeria’s electricity paradox: vast energy potential constrained by weak infrastructure and financial fragility. For businesses, especially manufacturers and growth-oriented MSMEs, energy reliability has become less about national reform promises and more about self-reliance, a trend that continues to reshape the country’s economic landscape.
