The Nigerian Electricity Regulatory Commission (NERC) has approved captive power generation licenses for 20 additional companies in the third quarter of 2025, allowing them to produce a combined 5.85MW independently and reduce reliance on the struggling national grid.

According to NERC’s latest quarterly report, these firms obtained permits for self-generation exceeding 1MW strictly for internal use. “Captive plants above 1MW require NERC approval to ensure electricity is consumed solely by the license holder,” the regulator explained, highlighting the rising trend amid persistent supply shortages.

Grid-connected generation averaged just 4,179MWh per hour in Q3 2025, down by 602GWh due to gas supply constraints, despite available capacity of around 5,400MW. By contrast, captive generation capacity nationwide now exceeds grid levels, underscoring industrial Nigeria’s shift toward self-reliance.

The report also showed that distribution companies (DisCos) collected N570.25 billion of the N706.61 billion billed, achieving 80.7% efficiency, but consumers continue to experience frequent outages. Bilateral deals further illustrate the shift: generation firms earned $7.12 million and N3.19 billion directly from customers, bypassing the grid entirely.

NERC warned of liquidity challenges in the sector, citing special customers like Ajaokuta, which owes N1.03 billion to the Nigerian Bulk Electricity Trading Company (NBET). “Remittance gaps undermine market stability,” the report said.

The regulator affirmed that the issuance of multiple captive permits aligns with the Electricity Act and aims to enhance industrial energy security. While DisCos saw modest revenue gains, structural issues remain, including voltage and frequency deviations, heavy government subsidies, and ongoing debt settlements.

The report also revealed that government electricity subsidies totaled N458.75 billion in Q3, a 10.81% decline from the previous quarter, reflecting lower energy offtake and a slight drop in generation costs, while tariffs remained frozen since July 2024.

NERC concluded that gas supply constraints and systemic inefficiencies continue to push more companies toward off-grid solutions, illustrating Nigeria’s paradox: abundant generation potential yet persistent power supply challenges.