Determinants of the dynamics of electricity consumption in Nigeria

Abstract

The persistent electricity supply problems in Nigeria are attributable to the inability of energy planners to accurately forecast the effect of 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 socioeconomic and physical factors upon which they are based. The goal of this study is to empirically determine 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, population density, number of manufacturing industry, number of households with electricity, employment 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.

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