An Econometric Analysis of the Determinants of Electricity Supply in Nigeria

Abstract

Electricity supply has been identified as the key constraint to industrialization and economic development in Nigeria. Recently, the government of Nigeria has initiated a lot of projects aimed at boosting electricity supply but this effort seems to yield no positive results. This may be attributed to the inability of policy makers to identify the determinants of electricity supply for actual policy formulation and implementation. Hence, this study analyzed the determinants of electricity supply in Nigeria (from 1970-2009), using a parametric econometric methodology of ordinary least squares. The results showed that technology, government funding, and the level of power loss were the statistically significant determinants of electricity supply in Nigeria and that an average of 40% of power is lost in transmission per annum. Thus, the government should inject more funds into the power sector to complete power projects with state of the art technology in order to enhance electricity supply.