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PRIVATIZATION AND TRENDS OF AGGREGATE CONSUMPTION OF ELECTRICITY IN NIGERIA: AN EMPIRICAL ANALYSIS

Kola Subair

American Heritage University, USA.

 

David Mautin Oke

Lagos State University, Nigeria.

ABSTRACT

Electricity as a source of energy is vital to the growth and development of any economy. Its significance arises from the impact it has on infrastructure, a range of socio-economic activities and consequently on the country‟s standard of living. This means that transportation, communication, construction, and other facilities depend on electricity to function effectively. Electricity has continued to play a significant role in the development process. In the Nigerian situation the reverse appears to be the case because power outages have continued to affect the country‟s development. Some have argued that privatizing electricity supply through the unbundling of power generation arm of National Electric Power Authority (NEPA) now Power Holding Company of Nigeria (PHCN) will ensure its efficiency. Despite this reform, electricity supply is still rationed to the consumers in ways that are still grossly inadequate. This study shows with empirical evidence that privatizing the power sub-sector in Nigeria will significantly reduce the aggregate demand for electricity in the short-run.

Keywords: electricity consumption, privatization, Nigeria.

JEL classifications: E2, L33, Q41, Q43, Q48