REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework & Review
Energy consumption, power, coal, crude oil, and national development will be fully reviewed in this portion of the conceptual framework of the research.
2.1.1 Energy Consumption in Nigeria
Energy is the capacity of matter to do work as a result of its motion or location relative to the forces operating on it (Onakoya, Onakoya, Jimi – Salami and Odedairo, 2013). Everything we do, from producing a leap to sending men into space, requires energy. According to Tejada-Bailly (1981), the same idea may be stated as the quantity of heat that must be transmitted, traded, or consumed in order to carry out a process or deliver a product to a certain point in the economic system. The forms of energy include atomic, electrical, chemical, mechanical, nuclear, radiant, and thermal. Although energy may be transported from one form to another, neither its creation nor its destruction is possible. Energy may be derived from several main and secondary, commercial and noncommercial, conventional and nonconventional, renewable and nonrenewable, and traditional and nontraditional resources (Aminu and Aminu, 2015).
It is commonly acknowledged that energy is the driving force behind all economic activity and industrial output. Consequently, high-quality energy resources will enhance the impact of technology and foster significant national growth (Onakoya et al., 2013). The significance of energy lies in other aspects of development, such as the increase in foreign earnings when energy products are exported, the transfer of technology in the process of exploration, production, and marketing, the increase in employment in energy industries, the improvement of workers’ welfare through wage and salary increases, and the improvement of infrastructure and socio-economic activities during energy resource exploitation (Onakoya et al., 2013).
Nigeria was fortunate to possess vast energy resources, which may provide the nation with abundant potential to improve its economy and the lives of its population. Nigeria has around 35 billion barrels of oil, 187 trillion cubic feet of gas, 4 billion metric tons of coal and lignite, as well as vast quantities of tar sands, hydropower, and solar radiation (Adenikinju, 2008; Odularu and Okonkwo, 2009). Today, Nigeria is regarded as one of the most rapidly growing states in Africa, with abundant natural resources and energy resources. However, expanding electricity access in Nigeria has proven to be not just an unending obstacle, but also a chronic concern for the international community. The importance put on crude oil by the nation is quite significant. Nigeria’s over dependence on crude oil is a significant problem since the country has failed to diversify its energy use and guarantee an appropriate energy balance. Currently, there is no substitute for oil, thus its usage is quite important (Odularu and Okonkwo, 2009). Insignificant amounts of fossil fuels such as coal are exploited in the nation. The coal in eastern Nigeria is subbituminous, meaning it burns slowly and produces a great deal of heat. Consequently, it has less Sulphur and ash. Since its discovery in 1916, coal has been the most commonly utilized commercial fuel in Nigeria.
Since oil was discovered in Nigeria, coal has been demoted to a lesser status and has become inactive. With a stockpile of more than 2 billion tonnes, Nigeria produces between 2,000,000 and 600,000 tonnes annually. The estimated per capita electricity consumption in Nigeria is 82 kilowatts, which is grossly insufficient compared to other African countries such as South Africa, which has a per capita consumption of 3,793 kilowatts. Nevertheless, the country’s substantial energy resources, if properly used, can provide a sufficient energy supply. If there is a positive relationship between consumption and national development, then the advantages of greater consumption include the generation of more revenue, the expansion of economic activities that will support national development, and the decrease of poverty (Odularu and Okonkwo, 2009).
2.1.2 Overview of Energy Resources investment in Nigeria
With a population of more than 140 million, Nigeria is blessed with vast energy resources, including petroleum, natural gas, coal, nuclear, and tar sand. Also included are solar, wind, biomass, and hydropower. Nonetheless, water, petroleum, and natural gas have dominated the development and utilization of such energy sources. At the time of independence in 1960, agriculture comprised around 70% of the GDP. In 1970, with the discovery of oil, this pattern shifted.
In 1916, the exploitation of Nigeria’s energy resources started with coal. Nigeria has about 600 million tonnes of proved reserves and almost three billion tonnes of indicated reserves in seventeen major coalfields (Anaekwe, 2010). Many coal mines were abandoned after the Nigerian civil war, and coal output never fully recovered. Coal output levels have been unpredictable as the revitalization and maintenance of imported mining equipment have proven problematic (Godwin, 1980). As a consequence, coal output decreased somewhat from fifty percent in 1960 to less than one percent in 1990. This drop in coal output was expedited by Shell Darcy’s discovery of commercial amounts of crude oil in Otuabagi / Otuogadi, Oloibiri area, Bayelsa state, on January 15, 1956. Between 1970 and 1980, petroleum products were inexpensive and widely accessible as premium motor spirit (PMS), often known as gasoline, became Nigeria’s primary source of energy. Consequently, all other energy sources were disregarded (Oji, Idusua, & Kareem, 2012).
With over 9 billion tons of known oil reserves, Nigeria is one of the major hydrocarbon feedstock producers in Africa and ranks twelfth globally.
For national development, the nation depends significantly on its petroleum industry, which contributes for around 80% of government income and 95% of foreign cash (Iwu, 2008).
Nigeria belongs to the Organization of Petroleum Exporting Countries (OPEC). In addition, the country’s natural gas reserves are 5,2 trillion cubic metres, making it the eighth largest natural gas resource in the world. Although natural gas occurs in conjunction with crude oil, Nigeria has three times more gas reserves than oil reserves. As seen by the completion of the Trans-Saharan Gas Pipeline, the government is dedicated to growing gas production for both internal and export purposes. This will allow Nigeria to provide Europe with natural gas. The nation supplies 10% of the world’s LNG (Corporate Nigeria, 2012). Despite this possibility, gas flaring has persisted unchecked for decades (Eboh, 1998).
Currently, the Nigerian energy crisis has stifled the country’s socioeconomic activity, causing unimaginable misery for its citizens. Currently, the country’s electrical supply does not satisfy national demand. As of December 2009, the expected daily power output was around 3,700MW, whereas the peak load prediction for the same time was 5,103MW. This is based on the current grid connections, which do not account for the decreased demand. On the basis of estimates on transmission and distribution losses, auxiliary consumption, load factor, and diminishing non-grid generation, the predicted power demand has also been translated into demand for grid electricity and peak demand (Energy Information Administration, 2012). According to projections, demand would increase from 5,746 MW in 2005 to 297,900 MW in 2030, necessitating the annual installation of 11,686 MW (Sambo, 2008). In place of the government-owned monopoly company (Power Holding Company of Nigeria), three hydro and seven thermal generating, a radial transmission grid (330kV and 132kV), and eleven distribution companies (33kV and below) responsible for wires, sales, billing, collection, and customer service within their geographical monopoly area have been established. Except for transmission, all other functions have been privatized.
The erratic nature of the electricity has caused a shortage of gasoline and kerosene, as inhabitants have turned to generators and kerosene-powered appliances to power their houses. Also, over 75% of our domestic fuel use is now comprised of imports (International Energy Agency, 2012). This has led to the overuse and reliance on fuelwood, which has caused deforestation, environmental degradation, and a deepening of desertification (Babanyara & Saleh, 2010). They claim an average yearly deforestation rate of 2.38 percent in Nigeria between 1990 and 2000, in part owing to the switch to wood fuel as a consequence of kerosene and cooking gas price increases. Other alternative energy sources, such as solar, wind, and wave, are significantly undeveloped in the nation. Moreover, as a consequence of domestic gasoline costs that have increased many times, transit fares and prices of products and services have also increased. According to Bamikole (2012), industrial capacity utilization fell from 78.7% in 1977 to 30.1% in 1987, before bouncing back to 53.3% in 2007 and 53% in 2010. In the next part, a literature review is offered.