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 the economy of Nigeria, this study was undertaken majorly to examine the impact of power generation on the economy of Nigeria between 1990 and 2015. Specific objectives of the study are: to examine the level of effectiveness of the Power generating companies in Nigeria, to identify the factors limiting the adequate generation of Power in Nigeria between 1990 and 2015. The study utilizes secondary data extracted from the published annual reports of the commercial bank used for the study. With the secondary data collected, returns on assets and equity for the relevant years were computed. The secondary source used in conducting this research was based extensively on documentary sources which are textbooks, journals, articles, newspaper articles, paper presentations etc. also it involved Publications of Central Bank of Nigeria and monetary institutions such as CBN bulletins, presentations, slides, commercial bank bulletins etc. The type of research design for this study is exploratory and it is conducted because a problem has not been clearly defined. Various analytical tools and soft wares such as pie charts, tables, and Statistical Package for Social Science (SPSS) will be used in analyzing data for this study. Data collected will be analyzed using frequencies and percentages. These frequencies and percentages will enable the researcher to clearly represent true data characteristics and findings with a great deal of accuracy. Interpretation and analysis of data will also be used to describe items in tables used for this study. Findings from the study revealed that there is a positive significant relation of 0.745 between power generation and economic development of Nigeria. The outcome of this study will educate the general public on the impact of power generation on the economy of Nigeria between 1990 and 2015.

CHAPTER ONE

INTRODUCTION

1.1     Background to the Study

Electricity is pivotal to the economic development of nations. Its use is directly correlated with healthy economic growth (Kaseke & Hosking, 2013). Nigeria is one of the most populated countries in Africa but only about 40% of the people are connected to the energy grid. The people who actually have power experience difficulties around 60% of the time (Aliyu, Ramli & Saleh, 2013).

Aliyu, Ramli and Saleh, (2013) claim that these blackouts that is occasioned by poor power generation has crippled the industrial sector. For example outages in this area of the world also have implications for the mining industry. When power fails, workers may be trapped in the mines, so as soon as there is a risk of failure the operations are such down, which leads to economic difficulties (Kaseke & Hosking, 2013). Poor power generation also causes problems for agriculture. Most irrigation lines are run by electricity, so when the power is cut out then the crop yield decreases, (Kaseke & Hosking, 2013). Nigeria’s energy grid is arguably in crisis due to lack of development. The key to making a more reliable energy sector is to find and use a renewable energy resources, rather than simply relying on the country’s non-renewable resources for power generation. The crisis of power generation is a complex problem stemming from a variety of issues. This study will cover the impact of power generation on the economy of Nigeria between 1990 and 2015 and the effect on the people who live in Nigeria and the potential solutions to the crisis.

The people in Nigeria near the oil and natural gas reserves often vandalize or steal oil because they feel like they should have a share in the oil that is coming from their area of the country (US Energy Administration, 2013). In Nigeria the shortfall of electricity leads to the overuse of generators for energy. It is estimated that about 30% of power generated is produced in this manner (US Energy Administration, 2013). Currently the only plan the government has in place to help solve the power generation crisis is to expand the fossil fuel burning sector (US Energy Administration, 2013). Nigeria has a reputation of having one of the most corrupt governments in the world (Ejiogu, 2012). It is rich in natural resources, which should and does create billions of dollars of revenue, the production of the oil is not shared with the rest of the country. About 70% of people in Nigeria live below the poverty line and the unemployment rate is 21% (Ejiogu, 2012). Alternative forms of power generation are not used probably because of availability of oil in Nigeria, as it has the world’s seventh largest oil reserves (Ejiogu, 2012).