Assessing the Optimal Electricity Supply in Nigeria

Abstract

The Nigeria’s electricity problem is not just one of quantity, but also of reliability and efficiency. The question of whether what is supplied represents the optimal supply is another issue. Thus, drawing from historical data, this study, therefore examined the optimal or desired electricity supply in Nigeria from 1980 to 2014 using partial adjustment model of electricity supply that is estimated in a fixed-effects OLS framework. The stationary properties of the series are explored using modified Ng-Perron unit root test. The results revealed that all the variables are I(1) process except electricity loss which is I(0). The ARDL Bound Testing approach to co-integration revealed an inconclusive evidence of long-run relationship among the variables of study. The finding indicates that actual electricity supply in Nigeria for the period under review has been less than the optimal level, except in 2014. The paper, therefore recommends that government should inject more funds/subventions into the power sector in order to complete the various power projects with state of the art technology and that adequate security measure should be put in place to protect electricity generation, transmission and distribution equipments from being vandalized.