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The Economic Costs of Unsupplied Electricity in Nigeria s Industrial Sector: The Roles of Captive Power Generation and Firm Characteristics

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  • George Abuchi Agwu

    (Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike Ikwo (AE-FUNAI), Ebonyi State, Nigeria,)

  • Iyke Uwazie Uwazie

    (Department of Economics, Michael Okpara University of Agriculture Umudike, Nigeria)

  • F. Tobechi Agbanike

    (Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike Ikwo (AE-FUNAI), Ebonyi State, Nigeria,)

  • Oguwuike Michael Enyoghasim

    (Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike Ikwo (AE-FUNAI), Ebonyi State, Nigeria,)

  • Lasbrey Anochiwa

    (Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike Ikwo (AE-FUNAI), Ebonyi State, Nigeria,)

  • Ikwor Okoroafor Ogbonnaya

    (Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike Ikwo (AE-FUNAI), Ebonyi State, Nigeria,)

  • Chima Nwabugo Durueke

    (Department of Economics and Development Studies, Alex Ekwueme Federal University, Ndufu-Alike Ikwo (AE-FUNAI), Ebonyi State, Nigeria,)

Abstract

Power failure is the most influential business constraint in Nigeria. In this study we pursue answers to two questions concerning policies to mitigate the problem. In the first, we model firms perception of power failure constraint and found that small and medium enterprises are most constrained. In the second, we examined firms willingness to pay to avoid power outages and found that on average and ceteris paribus, firms are willing to commit extra 15% of their annual sales to ensure uninterrupted power supply. Furthermore, captive power generating firms are even willing to pay more for uninterrupted power supply. The analysis was based on a sample of 2,676 firms compiled from 2014 World Bank s Enterprise Survey (WBES) for Nigeria. The empirical estimations were based on ordered probit and censored Tobit models respectively.

Suggested Citation

  • George Abuchi Agwu & Iyke Uwazie Uwazie & F. Tobechi Agbanike & Oguwuike Michael Enyoghasim & Lasbrey Anochiwa & Ikwor Okoroafor Ogbonnaya & Chima Nwabugo Durueke, 2019. "The Economic Costs of Unsupplied Electricity in Nigeria s Industrial Sector: The Roles of Captive Power Generation and Firm Characteristics," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 196-204.
    • Handle: RePEc:eco:journ2:2019-03-23
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    More about this item

    Keywords

    Power outages; industrial sector; captive power generation; firm;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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