ENERGY INFRASTRUCTURE CRISIS: PUBLIC OR

PRIVATE SOLUTION FOR NIGERIA

POINTS FOR CONSIDERATION

THE CONCEPT OF DEVELOPMENTINDUSTRIALIZATION IN THE PROCESS OF

DEVELOPMENTENERGY AND INDUSTRIAL DEVELOPMENT THEORETICAL PERSPECTIVES ON DEVELOPING

ENERGY FOR INDUSTIAL PURPOSESENERGY IN NIGERIAENERGY CRISIS IN NIGERIAPROSPECTS FOR ENERGY ADVANCEMENT IN

NIGERIA

THE CONCEPT OF DEVELOPMENT

Development can be said to be an all encompassing concept. This is because it involves how the aspirations for change in any economy can be achieved.Hence development could be multi-dimensional embracing the political, social, economic, technological, and infrastructural, cultural dimensions in life.The presentation concentrates more on economic development which in turn will incorporate infrastructural development.

ECONOMIC DEVELOPMENT THOUGHTS

Economic development could be said to be a sustained increase in the Gross Domestic Product (GDP) overtime.

Economic Development could also be said to be a rise in the distribution of per capita

GDP + CHANGE

ECONOMIC DEVELOPMENT THOUGHTS CONT`D

Dudley Seers (1969): Defines economic development as reduction in poverty, inequality and unemployment.

Amartya Sen(1999): Defines economic development as reducing deprivation and broadening choices.

A more recent view widens Dudley Seers questions of what has been happening to poverty, inequality and unemployment by adding what has been happening to the environment, gender equality and……?

OBJECTIVES OF DEVELOPMENT

The three core values above lead us to three objectives of development:To increase the availability and widen the

distribution of basic life-sustaining goods such as food, shelter, health, and protection.

To raise levels of living, including, in addition to higher incomes, the provision of more jobs, better education, and greater attention to cultural and human values

OBJECTIVES OF DEVELOPMENT CONT`D

To expand the range of economic and social choices available to individuals and nations by freeing them from servitude and dependence not only in relation to other people and nation states, but also to forces of ignorance and human misery.

DEVELOPMENT DEFINED

The process of improving the quality of all human lives and capabilities by raising people’s level of living, self-esteem and freedom

INDUSTRIALIZATION AND DEVELOPMENT

In the development circle, industrialization can be said to be associated with high productivity and incomes and has been the hallmark of modernization and economic power.

INDUSTRIALIZATION AND DEVELOPMENT CONT`D

In terms of economic and industrial advancement, International agencies such as Organization of Economic Cooperation and Development (OECD) and the United Nations, offer classification of countries by their economic statusThe best Known system is that of the International Bank for reconstruction and Development (IBRD) , which is also referred to as the World Bank.

INDUSTRIALIZATION AND DEVELOPMENT CONT`D

low-income countries (LICs), which are also known as third world countries or developing economies such as sub-Saharan African, Asia and Latin America countries.

lower middle-income countries (LMCs) , they include economies such as emerging economies such as North Korea, Taiwan as well as transitory economies such as Slovenia, Hungary, Czech Republic.

Upper middle-income countries (UICs), also known as industrialized nations such as the United States, Russia, Japan, Switzerland.

INDUSTRIALIZATION AND DEVELOPMENT CONT`D

Industrial economies on top scale include Germany, the United States, Japan

With particular reference to Nigeria, the Industrial Development Report of (2003) revealed that in 1985, Nigeria ranked 75 amongst industrial developed economies in the world and by 1998, it fell to 78.

INDUSTRIALIZATION AND DEVELOPMENT CONT`D

The Vision 20:20:20 of Nigeria is to be among the most industrialised economies by the year 2020

To achieve this, there s the need to put certain structures right to enhance this vision- human development (such as education and health), infrastructural development (roads, energy supply,), financial development, capital market development, foreign sector development, political developmet e.t.c.

ENERGY AND INDUSTRIAL DEVELOPMENT

This study will focus on Infrastructural development and particularly on the development of energy infrastructure in Nigeria. It has been observed many of today’s prosperity rests on secure and stable access to energy. Besides without requisite energy infrastructure, modern production grinds to a halt.

ENERGY AND INDUSTRIAL DEVELOPMENT

United Nations Industrial Development (UNIDO) in its 2009 reported that only one in four Africans has access to electricity. But, less than five per cent of the continent’s hydropower potential has been tapped.

Agenor(2006) equally observed that in sub-Saharan Africa, apart from the fact that only 16 percent of the roads are paved, less than one in five Africans as access to electricity,

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT

Most of the theories supporting the development of energy in the Nigeria economy are embedded in the development theories and models which include:- Classical economic models - Neo-classical economic models

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

This classical models has the following sub-topics:Development as Growth and the Linear-Stages TheoriesStructural-Change Models

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

Theorists of the 1950s and early 1960s viewed the process of development as a series of successive stages of economic growth through which all countries must pass.It was primarily an economic theory of development in which the right quantity and mixture of saving, investment, infrastructures and foreign aid were all that was necessary to enable developing nations to proceed along an economic growth path that historically had been followed by the more developed countries.

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

Development as Growth and the Linear-Stages Theories include: Rostow’s Stages of Growth Harrod-Domar Growth Model

This school of thought focused on the lack of domestic savings and investment to fast track development in all sectors. In order to promote growth, policymakers advocated that there was the need for higher savings and investment rates in developing countries, a proposition that was easier said than done.

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

Rostow’s Stages of GrowthThe model postulates that economic

modernization occurs in five basic stages, of varying length:

1) Traditional society:2) Preconditions for take-off:3) Take-off:4) Drive to maturity:5) Age of High mass consumption:

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

Traditional society: Characterized by subsistence economy – output not traded or recorded, existence of barter – high levels of agriculture and labour intensive agriculture

Preconditions for take-off: education, capital mobilization, establishment of banks and currency, infrastructural development entrepreneurial and manufacturing develops.

Take-off: occurs when sector led growth becomes common and society is driven more by economic processes than traditions.

Drive to maturity: refers to the need for the economy itself to diversify.

Age of High mass consumption: refers to the period of contemporary comfort afforded many western nations, wherein consumers concentrate on durable goods, and hardly remember the subsistence concerns of previous stages .

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

According to the Rostow’s Model, the preconditions for take-off and take take-off stages are the most important areas required to support development. Hence, if an economy will develop industrially, supporting infrastructures such as energy and power cannot be overemphasized.

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

HARROD-DOMAR GROWTH MODELOne of principal strategies for “take-off” was

thought to be mobilizing capital investment (roads, energy dams, factories, etc.) to generate economic growth

GDP growth is proportional to the share of investment spending in GDP.

That is: the growth rate of GDP depends upon the level of savings and the capital output ratio

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

H-D MODEL

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

H-D Model Cont`d

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

- The emphasis of the H-D model on savings to boost output equally emphasizes the importance of investment in various sectors.

- Hence an investment in energy development through infrastructural development can boost output in different sectors to include overall growth and development

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

Structural-change theory Structural-change theory deals with policies

focused on changing the economic structures of developing countries from being composed primarily of subsistence agricultural practices to being a “more modern, more urbanized, and more industrially diverse manufacturing and service economy”.

Representative examples of this strand of thought are :

W. Lewis’ two-sector surplus model. Hollis Chenery’s patterns of development

approach.

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

This approach views agrarian societies as consisting of large amounts of surplus labor which can be utilized to spur the development of an urbanized industrial sector.

To achieve industrial development, the existence of supportive infrastructure cannot be overemphasized

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

SUPPORTTING THEORIES OF ENERGY DEVELOPMENT CONT’D

Patterns of Development ApproachThis is the empirical analysis of the “sequential

process through which the economic, industrial and institutional structure of an underdeveloped economy is transformed over time to permit new industries to replace traditional agriculture as the engine of economic growth

In essence, the gradual journey towards being industrially developed must incorporate adequate infrastuctures-energy- to achieve a successful transformation in any country.

Transmission Mechanism between Energy and Development

Development

ENERGY IN NIGERIA

Energy in Nigeria describes energy and electricity production, consumption and export from Nigeria.. Nigeria is a member of the Organisation of Petroleum Exporting Countries.

Nigeria has oil reserves about 35 billion barrels 10th highest and gas reserves about 5 trillion cubic metres, 9th highest. Global production in 2009 reached 29 billion barrels of oil and 3 trillion cubic meters of natural gas.

Primary energy use in 2009 in Nigeria was 1,259 TWh and 8 TWh per million persons (Tranparency International,2011).

ENERGY IN NIGERIA

Nigeria was 10th top oil producer in 2005. In 2009 Nigeria was not among the top ten crude oil producers, but it was the fifth oil exporter (key world Energy Statistics, 2006)

ENERGY IN NIGERIA

The organisation responsible for electricity production and supply in Nigeria is the National Electric Power Authority (NEPA), which has been renamed the Power Holding Company of Nigeria (PHCN) as part of the privatisation process

Installed generation capacity is 4,200 MW The maximum available capacity is limited to

3300 MW

ENERGY IN NIGERIA

Other forms of energy include:- Coal- Solar- Uranium- Hydropower- Gas

- Amongst the sources of electricity, Gas was the highest contributor of 39.8% as well as hydropower of 34%, to electricity generation(World Bank, 2001)

ENERGY CRISIS IN NIGERIA

WHAT IS ENERGY CRISISEnergy crisis is any great shortfall (or price rise) in the supply of energy resources to an economy. It usually refers to the shortage of oil and additionally to electricity or other natural resources.

ENERGY CRISIS IN NIGERIA

Out of over 150 million people, 60% of the populace connected to the grid system are short of electricity while 40% do not have access to electricity (Nigeria Energy Policy Report,2003). The grid is powered by hydropower and

thermal, which itself is composed offossil fuels