Kano Manufacturers Eye Direct Power Deals as DisCo Raises Objections

A brewing dispute is unfolding in Kano State’s power sector as local manufacturers move to bypass their existing electricity distribution company and purchase power directly from generation sources. This development, according to industry insiders, signals a significant shift in the electricity market and could reshape how industries in Nigeria access energy for production.

The Manufacturers Association of Nigeria (MAN) in Kano has expressed deep concerns over the unreliable and expensive electricity supply from the Kano Electricity Distribution Company (KEDCO), noting that persistent outages and high tariffs have continued to cripple production and threaten jobs across the state.

Kano, which hosts one of Nigeria’s largest industrial clusters, relies heavily on steady power supply for its textile, leather, agro-processing, and manufacturing sectors. However, manufacturers have long complained about erratic supply from KEDCO, forcing many companies to resort to self-generated power at significantly higher costs. The situation has worsened with recent tariff adjustments and poor service delivery, prompting calls for alternative solutions. MAN officials confirmed that discussions are already ongoing with the Niger Delta Power Holding Company (NDPHC) and other power generation firms to establish direct purchase arrangements, cutting off intermediaries like KEDCO.

According to the manufacturers, the Electricity Act 2023 and related market regulations make provisions for eligible customers to procure electricity directly from generation companies if their consumption levels meet certain thresholds. The move is expected to reduce costs, improve reliability, and enhance the competitiveness of Kano-based industries, many of which have suffered production cuts and layoffs due to poor power supply. Industrialists argue that without bold reforms, Kano risks losing its manufacturing base as investors divert capital to regions or countries with better infrastructure.

KEDCO, however, is pushing back against the plan, warning that allowing manufacturers to bypass the distribution company could destabilize the electricity market and threaten its financial viability. A senior official of KEDCO argued that industrial customers constitute a significant portion of its revenue base, and losing them would undermine its ability to serve residential and small business customers. The official added that while the company acknowledges the challenges in power supply, efforts are being made to improve infrastructure, expand metering, and enhance customer service to meet demand.

This tension highlights the broader structural problems facing Nigeria’s power sector. Despite reforms and privatization, distribution companies have struggled to meet expectations due to poor infrastructure, liquidity shortfalls, and high aggregate technical, commercial, and collection (ATC&C) losses. Many DisCos complain that they receive far less power from the national grid than they can sell profitably, while industrial customers argue that they should not have to bear the brunt of inefficiencies in the sector.

Energy experts have weighed in on the matter, suggesting that direct power purchase by eligible customers is a legitimate solution that could drive competition and improve service delivery. They argue that allowing manufacturers to source power directly could incentivize DisCos to improve operations and focus on underserved segments. However, they caution that proper regulatory oversight is needed to ensure that such arrangements do not create imbalances or worsen supply issues for other consumers.

The Manufacturers Association of Nigeria has also emphasized that the planned direct power purchase is not aimed at undermining KEDCO but rather to save Kano’s industrial sector from collapse. Many factories in the state are reportedly operating below 40 percent capacity, with some shutting down entirely due to energy costs. The association has called on the federal and state governments to support the initiative, noting that affordable and reliable electricity is critical to job creation and economic growth.

The Niger Delta Power Holding Company, which manages several power plants under the National Integrated Power Project (NIPP), has confirmed its willingness to work with eligible customers across the country, including Kano manufacturers. NDPHC Managing Director Chiedu Ugbo recently reiterated the company’s mandate to make power available where needed, emphasizing that its idle capacity could be utilized to support industrial growth.

The ongoing development in Kano could serve as a test case for how the Electricity Act 2023 will shape Nigeria’s evolving power market. If successful, similar arrangements could emerge in other industrial hubs such as Lagos, Ogun, and Aba, where manufacturers face similar challenges. The Federal Government and Nigerian Electricity Regulatory Commission (NERC) are expected to play a crucial role in mediating between DisCos and manufacturers to ensure fair competition and market stability.

For Kano’s industrialists, the stakes could not be higher. With unemployment rising and industries struggling, the ability to secure reliable electricity at affordable rates may determine the survival of thousands of jobs and the future of the state’s manufacturing sector. The coming weeks will be critical as negotiations advance and regulatory approvals are sought. Observers say the outcome will send a strong signal about Nigeria’s commitment to industrial growth and power sector reforms, potentially shaping investment decisions for years to come.

As the debate rages, it is clear that Nigeria’s power sector remains at a crossroads. Balancing the interests of distribution companies, industrial customers, and the broader economy will require decisive leadership, regulatory clarity, and significant investments in infrastructure. What happens in Kano could set an important precedent for the rest of the country as it grapples with the dual challenge of industrialization and energy reform.