IMPACT OF ELECTRICITY TO BUSINESS AND NATIONAL DEVELOPMENT
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IMPACT OF ELECTRICITY TO BUSINESS AND NATIONAL DEVELOPMENT
Chapter two.
REVIEW OF RELATED LITERATURE.
2.1 Conceptual Framework and Review.
This part will provide a comprehensive assessment of the study’s conceptual framework, including energy consumption, power, coal, crude oil, and national development.
2.1.1 Energy Consumption in Nigeria.
Onakoya, Onakoya, Jimi – Salami, and Odedairo (2013) define energy as the ability of matter to perform work as a result of its motion or position in response to forces acting on it. We need energy for everything we do
from making a jump to launching humans into space. Tejada-Bailly (1981) defines the same notion as the quantity of heat that must be transported, exchanged, or used up in order to accomplish a process or deliver a good to a specific point in the economic system.
Energy can take many different forms, including atomic, electrical, chemical, mechanical, nuclear, radiant, and thermal. Although energy can be transported from one form to another, it cannot be generated or destroyed.
Energy can be extracted from a wide range of resources, including primary and secondary; commercial and noncommercial; conventional and nonconventional; renewable and nonrenewable; and traditional and nontraditional (Aminu and Aminu, 2015).
Energy is often recognised as the driving force behind any economic activity, including industrial production. As a result, high-quality energy resources will strengthen the effect of technology and drive significant national development (Onakoya et al., 2013).
The importance of energy lies in other aspects of development, such as increased foreign earnings when energy products are exported, technology transfer in the process of exploration, production, and marketing;
increased employment in energy industries; improved worker welfare through wage and salary increases; and improvement in infrastructure and socioeconomic activities in the process of energy resource exploitation (Onakoya et al., 2013).
Nigeria has been fortunate to have abundant energy resources, which may provide many opportunities for the country to improve its economy and residents’ lives.
Nigeria has around 35 billion barrels of oil, 187 trillion cubic feet of gas, 4 billion metric tonnes of coal and lignite, and massive quantities of tar sands, hydropower, and solar radiation, among other things (Adenikinju, 2008; Odularu and Okonkwo, 2009).
Nigeria is now regarded as one of Africa’s most rapidly developing countries, with abundant natural resources and potential for energy production. However, expanding access to electricity in Nigeria has proven to be not only a continuous difficulty, but also a recurring concern in the international community.
The importance that the country has placed on crude oil is relatively significant. Nigeria’s overreliance on crude oil is a big issue because the country has failed to diversify its energy use and ensure an appropriate energy mix.
Oil usage is critical because there are currently no alternatives (Odularu and Okonkwo, 2009). The country extracts very little fossil fuel, such as coal.
The coal found in eastern Nigeria is subbituminous, which means it burns slowly and produces a lot of heat. As a result, it has a low sulphur and ash concentration. Coal has been the oldest commercial fuel utilised in Nigeria since its discovery in 1916.
Since the discovery of oil in Nigeria, coal has lost relevance and has become largely dormant. Nigeria produces between 200000 to 600000 tonnes per year from its reserves of more than 2 billion metric tonnes.
Per capita electricity consumption in Nigeria is projected to be 82KW, which is grossly inadequate, compared to other African peers such as South Africa, which has a per capita consumption of 3793KW.
However, with huge capabilities, energy can be amply provided throughout the country if properly harnessed. If consumption is positively associated to national development, higher consumption has the potential to generate more income, improve economic activity, and boost national development and growth, particularly poverty reduction.
2.1.2 An Overview of Energy Resource Investment in Nigeria
Nigeria, with a population of over 140 million people, has tremendous energy resources, including petroleum, natural gas, coal, nuclear, and tar sand. Others include solar, wind, biomass, and hydropower.
However, the development and exploitation of such energy sources has skewed in favour of hydro, petroleum, and natural gas.Agriculture was the largest sector of the economy at the time of independence in 1960, accounting for over 70% of total output. This pattern shifted with the discovery of oil in 1970.
The exploitation of Nigeria’s energy resources began in 1916 with coal. Nigeria has almost three billion tonnes of indicated reserves in seventeen known coalfields, as well as more than 600 million tonnes of proven reserves (Anaekwe, 2010). Following the Nigerian civil war, many coal mines were abandoned, and coal production has never fully recovered.
This is reflected in the irregular production levels of coal as both the resuscitation and maintenance of imported mining equipment proved difficult (Godwin, 1980). As a result, coal production decreased insignificantly, from 50% in 1960 to less than 1% in 1990.
On January 15, 1956, Shell Darcy discovered crude oil in commercial amounts in Otuabagi / Otuogadi, Oloibiri area in Bayelsa state, hastening the fall in coal output. Between 1970 and 1980, petroleum products were inexpensive and widely available, and premium motor spirit (PMS), sometimes known as petrol, became Nigeria’s primary source of energy.
As a result, all alternative energy sources were ignored (Oji, Idusuyi, and Kareem, 2012).With confirmed oil reserves over 9 billion tonnes, Nigeria is one of Africa’s top hydrocarbon feedstock producers, ranking twelfth in the world.
The country relies heavily on its petroleum industry for national growth; the sector accounts for around 80% of government revenues and 95% of foreign exchange (Iwu, 2008).
Nigeria is part of the Organisation of Petroleum Exporting Countries (OPEC). Furthermore, the country’s natural gas reserves total 5.2 trillion cubic metres, ranking it as the world’s sixth largest.
Although natural gas is coupled with crude oil, Nigeria’s gas reserves are three times larger than its oil reserves. The government is committed to boosting gas production for both internal and export markets, as seen by the ongoing development of the Trans-Saharan Gas Pipeline. This will enable Nigeria to supply gas to Europe.
The country supplies 10% of the world’s LNG (Corporate Nigeria 2012). Despite this possibility, gas flaring has persisted over the years (Eboh, 1998).Currently, the Nigerian energy crisis has hindered the country’s socioeconomic activity, causing tremendous hardship for its people.
Currently, the country’s electrical supply falls short of national demand. As of December 2009, the expected daily electricity generation was approximately 3,700MW, with a peak load forecast of 5,103MW. This is based on current grid connections and does not take into consideration decreased demand.
Furthermore, the expected energy demand has been translated into demand for grid electricity and peak demand using assumptions for transmission and distribution losses, auxiliary consumption, load factor, and diminishing non-grid generation (Energy Information Administration, 2012).
Demand is expected to increase from 5,746 MW in 2005 to 297,900MW by 2030, requiring the development of 11,686MW per year to meet this demand (Sambo, 2008).
While the government-owned monopoly company (Power Holding Company of Nigeria) has been debundled, three hydro and seven thermal generating plants, a radial transmission grid (330kV and 132kV)
And eleven distribution companies (33kV and below) that handle wires, sales, billing, collection, and customer service within their geographical monopoly area have been established. Except for transmission, all other functions have been privatised.
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