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Electricity Consumption and Capacity Utilization in Nigeria

Author

Listed:
  • Moses Oyeyemi Agbede

    (Department of Economics, Adekunle Ajasin University, Akungba, P.M.B. 001, Akungba Akoko, Ondo State, Nigeria)

  • Favour C. Onuoha

    (Nigeria, Department of Economics, Evangel University Akaeze, P.M.B. 129, Abakaliki Km 48 Enugu Abakaliki Expressway, Okpoto Ebonyi State, Nigeria,)

  • Benedict Ikemefuna Uzoechina

    (Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria,)

  • Foluso Olufunke C. Osunkwo

    (Department of Economics, Abia State University, Uturu, Nigeria)

  • Sunday Uche Aja

    (Department of Mass Communication, Alex Ekwueme Federal University, Ndufu-Alike, Ebonyi State, Nigeria,)

  • Veronica Adaku Ihezukwu

    (Department of Economics, Abia State University, Uturu, Nigeria)

  • Chukwu Agwu Ejem

    (Department of Banking and Finance, Abia State University, Uturu, Nigeria,)

  • Udochukwu Godfrey Ogbonna

    (Department of Management Sciences, Rhema University, Aba, Abia State, Nigeria.)

Abstract

The study investigated the effects of electricity consumption on capacity utilization in Nigeria from 1981 to 2017. The study made use of annual time series data which were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin (2018) and World Development Indicators (WDI). Unit root test of Augmented Dickey-fuller (ADF) and Philip Perron (PP) were used for preliminary test with Johansen co-integration test. The study employed Normalized co-integration and vector error correction mechanism in analyzing the data. The unit root results indicated that all variables were stationary at differenced of order I(1), while co-integration established a long run relationship among the variables. The normalized co-integration finding revealed that lnelec, lncabem and lnelecge have positive impact on the lncpu while lncrind and lnecp have negative impact on lncpu, on average. The coefficients of lnelec, lnecp and lnelecge were statistically significant at 5% and 1% levels of significance. Vector error correction mechanism technique showed that a unit rises in inelec, incabem and inelecge decreases incpu by 0.96 percent, 0.20 percent and 0.55 percent respectively on average in the long run while a percentage change in inelec, incabem and inelecge decreases lncpu by 0.186, 0.020 and 0.125 percent respectively on average, ceteris paribus in the short run. Therefore, the study recommended policies aimed at providing reliable and stable power supply thereby creating avenue for maximum capacity utilization in Nigeria industries.

Suggested Citation

  • Moses Oyeyemi Agbede & Favour C. Onuoha & Benedict Ikemefuna Uzoechina & Foluso Olufunke C. Osunkwo & Sunday Uche Aja & Veronica Adaku Ihezukwu & Chukwu Agwu Ejem & Udochukwu Godfrey Ogbonna, 2020. "Electricity Consumption and Capacity Utilization in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 483-490.
    • Handle: RePEc:eco:journ2:2020-06-63
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    References listed on IDEAS

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    1. Adeola F. Adenikinju & Louis N. Chete, 2002. "Productivity, market structure and trade liberalization in Nigeria," Working Papers 126, African Economic Research Consortium, Research Department.
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    More about this item

    Keywords

    Electricity consumption; Capacity utilization; Electricity generated;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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