Impact of Deregulation on Residential Electricity Consumption in Nigeria: 1980-2017

Abstract

This study is an assessment of the impact of deregulation of the electricity market on the residential consumption of electricity in Nigeria from 1980 to 2017.Among the specific objectives set for the study are to examine the impact of deregulation on residential demand for electricity in Nigeria and to investigate if the residential demand for electricity in Nigeria responds to change in tariff (pricing)regime; Annual time series data on residential electricity consumption (REC), electricity tariff (ETA); income (ICM) and deregulation (a dummy variable) were collected from national electricity regulation council (NERC) and central bank of Nigeria (CBN) respectively and were analyzed using augmented dickey-fuller (ADF) and Philip-peron (PP) unit root test, co-integration test and vector error correction model (VECM),the result of the analysis shows the long run relation among the variables and the estimated long run elasticity values are:0.25 on income GDP and electricity price was -0.431 on the coefficient of deregulation (dummy) has negative sign and statistically significant suggesting that deregulation leads to a slight decline in electricity consumption. It is therefore recommended that, sustainable development of the electricity power industry should be ensured. Higher energy efficiency standards for electricity appliances, organized appropriate pricing policy and introduction of enlightenment campaign to educate people to be efficient in using electricity.