Analysis of Energy Balance on Nigeria’s Economic Growth: Evidence On Electricity Sector: 1970-2010.

Abstract

This study analysed the effects of energy balance on Nigeria’s economic growth, with specific focus on the electricity sector. The endogenous growth model complimented with an econometrics packages were adopted to determine the relationship between energy (electricity) demand, energy supply and energy balance: their stationarity and short and long run effects. The parsimonious estimate declared the relevance of electricity supply and demand to economic growth. To test the impact of electricity balance on economic growth, the second model included energy (electricity balance, this resulted to overall change in influence and significance. The implication to the study is that the energy difference caused by excess demand is a strong determinant to the diabetic economic growth in the country. Against this background I this study suggests adequate funding, rehabilitation of existing power plants and construction of new ones to support the existing ones. Also recommended is the exploitation of nuclear sources of power supply, intensification of efforts to checkmate vandals and thieves of power apparatus, distilled massive private investment and incentives via multi year tariff order (MYTO) and gas sales agreement that eliminated direct government subsidies.