Roadmap for Power Sector Reform in Nigeria 2010:
Out of the Dark into the Dark Ages

Abstract

At a time when most countries in the world, developed and developing, are moving towards strengthening their electricity supply industries (ESIs) via the use of “green” energy sources and are moving away from over-reliance on fossil fuel as the primary source of generation, in August 2010 Nigeria launched a “roadmap” for the reform of its ESI that is predominantly reliant on fossil fuel as a driver of the reform. The rationale behind the policy choice, as canvassed by President Goodluck Jonathan, is that “the high capital costs required to implement commercial power generation through these alternate fuel sources” is too enormous for the federal government to bear. However, some important non-cost aspects of the industry, such as the finite nature of fossil fuel, the volatility of the geographical location where it is concentrated, and the impact of its use on the environment, appear to have been discounted in the analysis leading to the policy choice. This article applies the non-statistical multivariate methodology in its analysis of the Roadmap as it relates to generation of electricity through the use of fossil fuel inversely related to security of supply, technological advancement, and environmental protection. The article finds that the result of the continuation of the reform process in its present format would lead to constraints on security of supply by nonconvexity of technology and by non-optimal use of easily available optimal sources for output, and would prolong the perpetration of damage to the environment. Such direction will also ensure that Nigeria’s ESI remains in the DarkAges as far as technological advancement in the production of electricity is concerned. It equally finds that a policy on the reform of ESI could promote the sustainable use of finite resources and the use of renewable sources, advance the use of modern technology, protect the environment, and ensure a secure supply of electricity without necessarily denting the purse of the government.

TOPICS: Emerging, ESG investing, volatility measures