• ALLEVIATING ENERGY POVERTY IN NIGERIA:

PRE-CONDITIONS AND POLICY OPTIONS BY

MAJEKODUNMI OWOLABI O. 1ATANDA, AKINWANDE A. 2

Department of economics Faculty of social sciences

University of lagos,Lagos,NigeriaMobile No:08069331042,08051977385

HIGHLIGHTS • INTRODUCTION • RESEARCH METHODOLOGY • LITERATURE REVIEW CAUSES OF ENERGY POVERTY IN NIGERIA IMPLICATION S OF ENERGY CRISIS FOR THE

FUTURE OF THE NIGERIAN ECONOMY .• DATA PRESENTATION AND ANALYSIS • POLICY RECOMMENDATION • SUMMARY AND CONCLUSION • REFERENCES

INTRODUCTION • Nigeria is located on the west coast of Africa,

it's the continent’s most populated country in Africa, with over 160 million people

• Among the different sectors that abound in the Nigerian economy, the energy sector constitutes a pivotal place as it is the driver of the other sector

• There is a gross lacuna between the aggregate energy supply and the aggregate energy demand and Nigeria has not been left out .

• Energy poverty is real and can be observed among students, civil servants ,women and others.

RESEARCH METHODOLOGY

• Secondary data method of statistical analysis was employed.

• The uses of graphs and tables was carefully and statistically employed to reveal the lacuna inherent in the Nigerian energy sector.

• Percentages and ratios were used to depicts several sectoral and national averages for comparative analysis purposes

• More so, virtuous circle model was also developed to bring about a learning curve effects and economics of scale thereby leading to sustainable energy development and facilitate the achievement of MDGs

LITERATURE REVIEW

• There are growing literatures on the state of Nigeria’s energy crisis because of the pivotal role of the sector in achieving both macro and micro economic growth and development.

• According to Agba (2010), he define Energy Poverty as the limited access to energy resources like electricity, gas, fuel, kerosene and diesel. In other words, energy crisis or poverty arises when there is a lag between supply tendencies and demand expectations of energy resources.

• As an attempt to rectify this situation, the government divided the National Electric Power Authority (NEPA) into two sectors in 2005, one in charge of the generation of power and the other in charge of the distribution of power [ Prof Babafemi Akinrinde ].

• As part of this division, the government sought to privatize these sectors in an effort to finance and organize the needed development of infrastructure.

• This effort on the part of the government takes place in the face of a general population opposed to the prospect of privatization.

• As a result, the general population often vehemently resists any efforts associated with privatizing the energy sector.

Cont’d

• There is an extreme energy cum electricity deficiency in Nigeria and the causes of this deficiency are related to financial, sociopolitical, and structural issues which lead the power sector in Nigeria to be recording high energy losses from power generation and billing which lead to insufficient cash generation as a result of these inefficiencies (A. Iwayemi 2008).

• Corroborating this view, Baker (2008) opined that about 60% of the country’s population lack access to electricity for their basic needs worsening the ongoing poverty situation in the economy.

CAUSES OF THE ENEGRY POVERTY IN NIGERIA

• Since Nigeria’s independence in 1960, the nation has had to put up with acute shortages in the production and distribution of energy essential to the sustenance and acceleration of economic activities and its growth. Factors militating against the energy sector come in different dimensions. They are as follows:

• POLITICAL PROBLEMS: The Nigerian economy over the years has witnessed different political instability More so, the policy inconsistency of the Nigerian Government has dwindled expected growth and development prospects of the Energy sector.

• TECHNOLOGICAL PROBLEMS: Technology is very crucial in the energy sector. Hence, the level of technological deepening of the sector determines the level of the marginal product of labor and capital. In the Nigerian energy sector, PHCN’s severe technological deficiencies are prevalent throughout the power system, both upstream and downstream.

• ENVIRONMENTAL PROBLEM: • The Nigerian geographical area is one that is

prone to unfriendly environmental situations. The trends of climate change have led to a continual loss of water.

IMPLICATIONS OF THE ENERGY POVERTY FOR THE FUTURE OF THE NIGERIAN

ECONOMY• The energy poverty has bedeviled the Nigerian

economy over the years and this has generated different crippling effects in the economy at present. Therefore, the following have been highlighted as implications of the energy crisis situation for the future.

• HIGH POVERTY RATE• HIGH UNEMPLOYMENT RATE • RETARDED GROWTH IN RESEARCH AND

DEVELOPMENT.

• RETARDED GROWTH IN RESEARCH AND DEVELOPMENT

• BAD HEATH IMPLICATIONS• INADEQUATE FOREIGN INVESTMENT AND

CAPITAL FLIGHT• ENVIRONMENTAL DEGRADATION• BALANCE OF PAYMENT DEFICIT.

DATA PRESENTATION AND ANALYSIS• Given the underperformance of the energy

sector and the analysis of the energy poverty, the following data are generated to expose this disturbing phenomenon.

The electricity supply - demand balance sheet

PLANT CAPACITY(MW) DEMAND SITUATION

Installed Effective Morning Peak

Evening Peak

Highest Demand

Average Demand

Demand 4,633 1,712 1,500 1,800 1,902 1,855

Excess 212

Shortages 2,921 88 190 140

Remarks Unsatisfactory

Unsatisfactory

Unsatisfactory

Unsatisfactory

Unsatisfactory

• from the above,• it is evident that the Nigerian economy has been plagued

with a disturbing energy crisis situation.• Given that in 2002, the total installed capacity was 4,633

MW which was mainly generated from thermal and hydro plants in the country, the effective utilization capacity was about 1712MW.

• This shows that our capacity for energy production is very unsatisfactory and underutilized showing a shortage of 2921MW.

• The average demand situation is about 1855MW which is greater than the projected effective utilization of the installed capacity. This shows a shortage of about 140MW, revealing that there is shortfall between demand and supply.

ELECTRICITY PRODUCTION (KWH) IN NIGERIA

• The Electricity production (kWh) in Nigeria was 19777000000.00 in 2009, according to a World Bank report, published in 2010.

• The Electricity production (kWh) in Nigeria was reported at 21110000000.00 in 2008, according to the World Bank. Electricity production is measured at the terminals of all alternator sets in a station.

• . Production includes the output of electricity plants that are designed to produce electricity only as well as that of combined heat and power plants

ELECTRICITY PRODUCTION (KWH) IN NIGERIA

ENERGY PRODUCTION (KT OF OIL EQUIVALENT) IN NIGERIA

• Energy production refers to forms of primary energy--petroleum (crude oil, natural gas liquids, and oil from nonconventional sources), natural gas, solid fuels (coal, lignite, and other derived fuels), and combustible reneweables and waste--and primary electricity.

• The Energy production (KT of oil equivalent) in Nigeria was 228721.61 in 2009, according to a World Bank report, published in 2010. The Energy production (KT of oil equivalent) in Nigeria was reported at 228245.88 in 2008, according to the World Bank.

• The graph below depicts that the energy production (KT) of oil equivalent in Nigeria has been on the increase. In other words, Nigeria has produced more of its energy from crude oil. This is quite true considering that Nigeria is monolith economy highly dependent on crude oil.

•  

ENERGY PRODUCTION (KT OF OIL EQUIVALENT) IN NIGERIA

ELECTRICITY PRODUCTION FROM HYDROELECTRIC SOURCES (KWH) IN

NIGERIA

• The Electricity production from hydroelectric sources (kWh) in Nigeria was 4529000000.00 in 2009, according to a World Bank report, published in 2010

• The Electricity production from hydroelectric sources (kWh) in Nigeria was reported at 5721000000.00 in 2008, according to the World Bank.

• A statistical trend analysis as represented by the graph shows that the electricity production from hydro-plants in Nigeria has fluctuated considerably but on the increase

ELECTRICITY PRODUCTION FROM HYDROELECTRIC SOURCES (KWH) IN

NIGERIA

GDP PER UNIT OF ENERGY USE (PPP DOLLAR PER KG OF OIL EQUIVALENT) IN NIGERIA

• The GDP per unit of energy use (PPP dollar per kg of oil equivalent) in Nigeria was 3.20 in 2009, according to a World Bank report, published in 2010.

• PPP GDP is Gross Domestic Product converted to current international dollars using purchasing power parity rates. Graphically, this can be illustrated below and this shows an upward projection or increase over the years. This means that the GDP per unit of Energy Use has increased considerably.

GDP PER UNIT OF ENERGY USE (PPP DOLLAR PER KG OF OIL EQUIVALENT) IN NIGERIA

Virtuous circle of energy poverty

• The purpose of the proposed virtuous circle model is to map the interrelations that brings about energy sustainability and development.

• It entails that using energy more efficiently, it would; reduce electricity bills, leave more energy available to extend energy supply to all part of the population

• Increase the efficiency and resilience of the economy, including reduced reliance on oil internationally, minimize the building of new power stations and thus free up capital for other investments like health and welfare.

Virtuous circle model

Increase energy output

Learning curve effect

Economic of scale (energy resource

availability)

Increased production efficiency

Energy reduction cost

Energy demand management (lower prices )

Energy sustainability and

development

Policy recommendation Having examined and critically analyzed the

energy crisis situation in Nigeria and its implication for the future of the Nigerian economy, these following policy recommendations have been proposed:

• Diversification into alternative sources of energy• Investment in nuclear technology• Enabling environments for investments • Anti-corruption policies and actions • Provision of adequate national resources • Better electricity tariff-structure • Intensified rural electrification measures

Summary and conclusion

• In summary and conclusion, this paper has critically examined the energy poverty in Nigeria, dissecting issues (historical and current) as well as deducing and providing valuable policy recommendations to salvage the future of the Nigerian economy

• Also the model used , though work in progress has provided insight to energy crisis in Nigeria. It raises concerns about how to supply uninterrupted electricity, environment sustainability and increase energy consumption required to influence economic revolution in the country. The model emphasizes the potential for sustained energy development thereby seeing energy sustainability as a virtuous circle Taking into consideration a learning curve effect and economic of scale( energy resources availability)

Remarks

Thanks for giving your attention