Determinants of the dynamics of electricity consumption in Nigeria

• DOI: http://doi.org/10.1111/opec.12004
• Published date: 01 June 2013
• Date: 01 June 2013
• Author: Obinna Ubani

Determinants of the dynamics of electricity

consumption in Nigeria

Obinna Ubani

Lecturer, Department of Urban and Regional Planning, University of Nigeria, Enugu Campus, Enugu,

Nigeria. Email: obinna.ubani@unn.edu.ng

Abstract

The persistent electricity supply problems in Nigeria are attributable to the inability of energyplan-

ners to accurately forecast the effectof the various socioeconomic and physical factors that influence

the electricity consumption across the country. The major problem with the existing forecasts of

electricity consumption is often assumed to be associated with poor identification of these socioeco-

nomic and physical factors upon which they are based.The goal of this study is to empirically deter-

mine the various factors that affect the electricity consumption rate in Nigeria. The study covers an

annual time series data from 1985 to 2005. Data for the study were collected through secondary

sources. Multiple linear regression was used to test the research hypothesis.The result suggests that

electricity consumption was significantly related to 6 of the 12 socioeconomic and physical factors

of this consumption rate studied at 0.01 level (R2=0.992). These are degree of urbanisation, popu-

lation density, number of manufacturing industry, number of households with electricity, employ-

ment rate and distance to nearest power generating station. These six variables are significantly in

determining the electricity consumption in Nigeria. Policies based on the outcome of this study will

produce positive and sound policy actions.

1. Introduction

Energy demand, and in particular, electricity consumption in Nigeria, has been growing

at a very rapid rate over the decades. In the 34 years spanning the period 1970–2004,

consumption of electricity in this nation increased from 752 million kwh to 8576.3

million kwh (CBN, 2006). Given current trends in population growth, industrialisation,

urbanisation, modernisation and income growth, electricity consumption is expected to

increase substantially in the coming decades as well. However, despite Nigeria’s vast oil

wealth, much of the country’s citizens do not have access to uninterrupted supplies of

electricity. Nigeria has approximately 5900 megawatts of installed electric generating

capacity. Power outages are frequent and the power sector operates well below its

estimated capacity. A fundamental reason offered is the low-generating capacity of the

Nigerian power sector relative to installed capacity. Consequently, the sector had to

undergo some reforms to increase power generation and distribution.Among the reforms

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