The Impact Of Power Generation On Economic Growth

The Impact Of Power Generation On Economic Growth

Abstract

The study examined the impact of power generation on profitable growth in Nigeria between 1980 and 2016. profitable growth was makeshift as real GDP while power generation was surrogated as electricity generated from hydroelectric, oil painting, natural gas and coal. In addition, power consumption per capita was employed as control variables. The econometric ways of stoked- Dickey Fuller unit root test, Johansen Cointegration test and Error Correction Model were employed.

The study concluded that power generation didn’t significantly contributed to profitable growth in Nigeria between 1980 and 2016. Thenon-significance of power generation on profitable growth in Nigeria isn’t unconnected to the fact that the generationsub-sector of the Nigerian power assiduity is beset with certain constraints that has averted the optimal generation of power.

The study concluded that; Issues pertaining to electricity product and profitable development should be given acceptable attention especially in the budget schemes and because of this, substantial quantum should be allocated to the power sector in order to resolve its challenges and keep the sector in good shape Government is signaled to unfeignedly apply the recommendations of the Power Sector Reform Committee and Oil and Gas Reform Committee; Acceptable attention should be placed on applicable backing of the power sector, security of gas force, conservation of being power force architectures, adjustment of conditioning among colorful stakeholders in the power sector and expansion of transmission and distribution networks; loose practices in the power sector must be checked. Any functionary set up to have dissipated public finances meant for given design should be brought to bespeak; Government should allow lesser participation of foreign and domestic investors in the power sector. This is because investment introduces new technology and moxie.

Chapter One

Preface

Background to the Study

Since the dawn of time, man as an individual and in groups have gone in hunt of power. Power to change effects and power to make effects be. Power, is appertained to in this paper as electricity or electric power. Power is essential to the profitable growth and development of nations. Its uses are directly identified with healthy profitable growthKaseke & Hosking,( 2013). Nigeria is one of the most vibrant countries in the world especially in Africa, still, about 40 of the country isn’t connected to the public power grid, and for the 60 that are connected, the power force is marred by regular and prolonged outages as well as low voltages which does further detriment than good Aliyu, Ramila, & Saleh,( 2013).

Aliyu, Ramila, & Saleh,( 2013) Claimed that these outages which are as a result of poor power generation and force, act as a crippling influence on the artificial sector. When power fails, work and productivity come to a grinding halt, labour hours are lost and seeing as labour is perishable, which means that any labour power withheld is lost and can noway be got back therefore a loss of power reduces productivity and effectiveness in the artificial sector.

Although Nigeria is rich in mortal and material coffers, its profitable and political developments have been agonized with heads since its independence in 1960. indicators of the failure of the Nigerian State are moment apparent in the pervasive cases of hunger, affectation, budget poverties, debt protuberance, road soliciting, harlotry, frauds, high crime rates in major metropolises, collapse of manufacturing diligence, corruption in public service, recession in entrepreneurial development and epileptic power force Fadeyi & Adisa,( 2012).

Nigeria’s energy sector is incontestably in extremity due to lack of development performing from poor running and mismanagement of the energy sector, in addition, external factors similar as vandalization have impacted negatively on the sector. Nigerians who live near to oil painting and natural gas reserves frequently trash oil painting pipes and steal oil painting as they feel it’s their right to partake in the oil painting coming from their region since the government in their opinions aren’t showing them the benefits of being from the region. In Nigeria the lack of acceptable power and a space in power force leads to over use of creators for the product of power/ electricity. It has been estimated that power generation capacity in Nigeria is above 7000MW by the current administration of President Buhari through Vice chairman Osibanjo at the 23rd Nigerian profitable Summit.

Nigeria’s power sector operated for several decades as a state monopoly also called National Electric Power Authority( NEPA) until 2005. NEPA controlled electricity transmission, generation and distribution installations with all the problems associated with public monopoly. This over centralization made it insolvable for electricity force to keep up with the growth in population and profitable conditioning. In 2005, government’s sweats to revitalize the power sector took the form of privatization. They intended to privatize NEPA using the name PHCN( Power holding company of Nigeria). They intended to transfer the means and arrears of NEPA to PHCN. Nigeria has the biggest gap in the world between electricity demand and force, furnishing its population of over 190 million with lower than 4000 megawatts of electricity.

In discrepancy, South Africa with a population of over 55 million people generates further than 40,000 megawatts while Brazil, a developing frugality like Nigeria, generates over 100,000 megawatts for its 201 million citizensFG,( 2013). Indeed, the gap in the power sector has far reaching counteraccusations for perfecting the business climate, sustaining profitable growth and the social good of Nigerians. About 45 percent of the population has access to electricity, with only about 30 percent of their demand for power being met.

The power sector is agonized by intermittent outages to the extent that some 90 percent of artificial guests and a significant number of domestic and othernon-residential guests give their own power at a huge cost to themselves and to the Nigerian frugality.

The Association of power generation companies( APGC) claims to have an installed capacity of 12,000 megawatts, with an available capacity of 8,000 megawatts but only 4,500 megawatts is suitable to be transmitted by the grid of which about 1,500 megawatts is available to induce electricity.

At 125 kWh per capita, electricity consumption in Nigeria is one of the smallest in the world AFDB,( 2009). Nigeria presently uses four different types of energy sources to induce power, these include Hydro, Natural gas, oil painting and Coal Aliyu, Ramila, & Saleh,( 2013). The power sector is still heavily dependent on the use of petroleum as the system of producing electricity which has braked down the emergence of indispensable forms of energyAliyu, Ramila, & Saleh,( 2013) similar as wind energy and solar energy, farther cementing Nigeria’s place as a mono frugality. Three out of four of Nigeria’s energy product coffers are linked with hothouse gas emigrations showing that the country isn’t growing with the times and needs the utmost radicalization of the power sector.

Nigeria is endowed with abundant energy coffers but suffers from a noway ending energy extremity which has proved delicate to break. Theco-existence of vast wealth in natural coffers and extreme particular poverty appertained to as the “ resource curse ” or’ Dutch complaint’ Auty,( 1993) is the Nigerian burden. The size of the frugality marked by the Gross National Income per capita is put at$ 1,190 and ranked 162 out of 213 countries in the world development indicator in 2009 The World Bank,( 2011). On profitable growth, the GDP per capita of Nigeria expanded by 132 between independence in 1960 and 1969, and rose to a peak growth of 283 between 1970 and 1979. The inflexibility of this led to the restructuring of the frugality in 1986. In the period 1988- 1997 which constitutes the period of structural profitable adaptation and liberalization, the GDP responded to profitable adaptation programs and grew at a positive rate of 4. In 2006, the real GDP growth rate was 7. The frugality when measured by the real GDP, grew by7.87 in 2010. National Bureau of Statistics,( 2017).

The power consumption( KW) in USA, Japan, South Africa, China, India and Nigeria were 3,913, 934, 212, 5,523, 973, and 24 independently, these roughly relate with the GDP per capita of the countries in 2014The World Factbook,( 2014). Nigeria’s energy coffers, particularly oil painting, are exported to other countries while its frugality suffers from severe faults of the veritably same product. This is substantiated by the limited and utmost times erratic force of electricity and deficit of utmost petroleum products.

The examination of literature shows that maturity of the studies carried out to observe the relationship between power generation and profitable growth focus on either testing the part of energy in stimulating profitable growth or examining the direction of reason between these two variables. Although the positive part of energy structure on profitable growth has come well known, there are some reservations about the results from these studies methodologically. Some authors have used panel data approach and multivariate models. It should be noted that utmost of these studies produced varied results and there’s no agreement on the actuality and direction of reason between energy consumption and profitable growth. This design is aimed at determining the relationship between power generation and profitable growth using electricity affair and gross domestic product as delegates. With a view to also chancing out if different sources of energy have varying impact on profitable growth.

Statement of Research Problem

In the 21st Century power/ electricity is the one thing that can not be lived without. In any area or region where there’s a deficit of electricity, the profitable conditioning in that area arrestment and in cases where they do not, they come more precious, adding the cost of product and therefore the overall price of goods and services. The issue of power force is one that’s keenly watched by spectators nationally and internationally, and has been continuously used politically as a means to gain votes with political campaigners always promising stable power force. For industrialists the issue of power force is one which has been watched with great interest as it would determine their amenability to invest in the country. As a result, the power generation issue is now one of the more sensitive issues in Nigeria especially since the power assiduity has endured lots of changes between 1980 and 2017. This exploration study thus aims to punctuate the relationship if any between power generation and profitable growth and therefore break the problem of retarded growth in the Nigerian frugality through a more stable and dependable generation of power.

Exploration Questions

The exploration questions which this paper will aim to answer are as follows.

1. Does power generation affect profitable growth?

2. What’s the quantum of power generated in the country?

3. What are the problems facing power generation in Nigeria?

4. What possible way can be taken to boost the power force of the country so as to boost the country’s frugality?

Ideal Of Study

The broad ideal of this design is to find ways of stimulating profitable growth in Nigeria and to see if power generation is one of similar ways.

The following are the specific objects for carrying out this exploration design

to determine if power generation affects profitable growth.

to determine the quantum of power generated in the country.

to determine the problems facing power generation in the county.

to ascertain the necessary way to be taken to ameliorate power generation.

thesis

H0 There’s no significant relationship between power generation and profitable growth in Nigeria between 1980 and 2016.

H1 There’s a significant relationship between power generation and frugality growth in Nigeria between 1980 and 2016.

Sources of Data

Data was collected from colorful sources. The data collected was secondary data collected from text, Journals, colorful issues of the National Bureau of Statistics, the central intelligence agency as well as from the world fact book.

Compass Of The Study

This exploration work covers a limited area which is on the impact of power generation and force on the profitable growth of Nigeria using GDP as a deputy for profitable growth. The exploration will be carried out empirically with data ranging from 1980- 2016.

Limitations of the Study

Time Constraint This exploration was done in addition to other academic work therefore cutting down the quantum of time available to be devoted to the exploration work.

Data vacuity Some data were delicate to gain due to both hamstrung record keeping and varying data numbers from different sources.

Financial Constraint Limited finances averted me from visiting the government parastatals involved in collating needed data.

Description Of Terms

profitable growth profitable growth is an increase in the capacity of an frugality to produce goods and services, compared from one period of time to another. It can be measured in nominal or real terms, the ultimate of which is acclimated for affectation. Traditionally, aggregate profitable growth is measured in terms of gross public product( GNP) or gross domestic product( GDP).

GDPThe gross domestic product( GDP) is one of the primary pointers used to check the health of a country’s frugality. It represents the total bone value of all goods and services produced over a specific time period.

Power/ Electricity is a form of energy that comes in positive and negative forms, that do naturally( as in lightning), or is produced( as in a creator). It’s associated with the presence and inflow of electric charges.

Mono- frugality A mono frugality is one which relies substantially on one commodity to bring in utmost of its profit from exportation.

Mega Watts of Power( MW)

This simply refers to the quantum of power a nation generates for her citizens which can be used for several productive tasks.

public income per Capita This can be defined as a the measure of the quantum of plutocrat earned per person in a certain country