Parallel Application of Monopoly and Competition in Nigeria’s Energy Sector: A Malediction to Energy and Economic Development

Abstract

Despite the abundant forms of primary energy available in Nigeria, the country has grappled with various energy shortage and erratic power supply for decades. Power can be out for more than 6 hours a day and homes rely on diesel generators for power supply. Businesses and industries have sought ways to develop their own source of power to keep their business afloat amid the darkness. They mostly rely on diesel engines which are expensive to maintain and this drives up the costs of production.

This problem has caused untold underdevelopment of the sector, subsequently leading to an economic downturn of the country. Energy is critical to the development of any economy. Most industrial economies in the world thrived on adequate and sustainable energy production to achieve industrialization. Nigeria no doubt is endowed with huge amounts of non-renewable and renewable forms of energy. It boasts of about 5 trillion Cubic feet of natural gas which currently places the country as the ninth natural gas producer in the world. The National Bureau of Statistics has estimated that Nigeria has about 37.2 billion barrels of proven oil reserves and about 209.439 million tons of recoverable short coal. In terms of renewable, Nigeria has a considerable amount of sunlight all through the year and the Northern Nigeria is ideal for siting wind turbines.

Successive governments have tried to fix this problem, but the issue of energy production in Nigeria has been beleaguered with corruption, economic policy mismatch and what Isser calls rhetorical appeals to models. The government has initiated reforms in solving some erratic energy development in the country by unbundling the vertically integrated utilities in the energy sector, such as NEPA but the yield has been nothing short of abysmal. Some of the reforms introduced have made matters worse as industry watchers are confused as to whether it is a monopoly or competition that is being practiced.

With the regulator’s over-bearing policies and its somewhat complicated implementation, the sector has not grown or become fully competitive. The era of government fixing tariffs of energy products has not aided the growth of the sector. The government's indecision as to practice a monopoly or open the markets to competition has made matters worse and by extension has affected the economy of the country seeing that energy production is directly connected with economic development.

This article looks at the energy sector in Nigeria specifically, power sector and explores the extent of the parallel practice of monopoly and competition and it's effect on the economy. This study will make a case for the need to develop a sustainable regulatory framework to reflect competitive outcomes and sustainable practice.