THE EFFECT OF ELECTRICITY APPORTIONING ON PRODUCTION INDUSTRY

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Electricity is central to industrialization of any nation. That the world is now a global village is mostly dependent on access to information which in turn is only possible with efficient and constant supply of electricity. The reliable and adequate electricity supply produces a multiplier effect which goes a long way in tackling the problem of poverty, unemployment and prevalent absence of technological and structural changes that are commonly seen in many developing countries like Nigeria.

Nigerian industrial development over the years has been bedevilled by a plethora of problems top among them is the epileptic nature of electricity supply. In recognition of the benefits of high industrial productivity as a veritable tool to industrialization, successive governments in the country since independence have adopted various polices, schemes and incentives towards realization of this all important objective. Some of these policies include the import substitution/indigenization policy (1972), the Structural Adjustment Programme (SAP) of (1986), the Bank of Industry and Small and Medium Equity Investment Scheme (2000), the Electricity Power Sector Reform Act (EPSRA) of (2005) and the National Integrated Industrial Development (NIID) blue print (2007).

Despite these policies, available statistics indicate that the production sector is experiencing slow growth and operation, and one of the factors responsible for this to a considerable extent is the poor energy consumption. The survey by the Manufacturing Association of Nigeria (MAN) carried out in the first quarter of 2006 painted a gloomy picture of the crisis in the Nigerian industrial sector. According to the survey, only 10 percent of production/manufacturing  concerns in Nigeria could operate at 48.8% of installed capacity, 60 percent of the companies operating were barely able to cover their average variable costs while 30 percent had to completely shut down due to inadequate supply of electricity (Okafor 2008, Adegbamigbe 2007, Udeajah 2006 and Ogunjobi 2015).Abundance of energy is a pre-requisite of manufacturing and it is mainly utilized for powering machines for the production of various items. The manufacturing sector has always emphasized the need to improve various infrastructures, particularly, electricity which is in primary form of energy required for production. However the recent apportioning of electricity by power parastatal involved makes it more difficult for production industries even when the bill does not equates the amount of energy supplied.Therefore this study is set to examine the effect of electricity apportioning on production industry.

1.2 STATEMENT OF THE PROBLEM

 The poor state of electricity supply system in Nigeria is threatening the welfare and security of life and properties of millions of individuals with adverse economic consequences for the country. The inadequacy of the national grid, especially the inability of the electricity generation capacity to match increasing demand in the country has led to increasing agitation for increased penetration of renewable energy sources (RESs) into the electricity supply mix. Electric energy is an important factor of production and crucial for industrialization and economic growth. The quest for rapid and firmly economic growth is a function among other variables, an adequate supply and distribution of energy particularly electricity.. Electrical energy is used in industries to power heavy machinery and smaller appliances (electrical to mechanical conversion). The electrical sector is a subset of the energy sector and access to electricity serves as the basic form of energy supply to the masses that play a vital role in the growth of a nation’s economy. Odell,(1965) in his study on the role of electricity in a rapidly developing economy, he observed that electricity is very important for industrialization which leads to economic growth and development.However when there is shortage of supply of electrical energy to the production industry or when the electrical bill given does not measure up to the power supplied, this affects the manufacturing of consumer items and at the extreme those who are into production are pressured to transfer the cost on menial consumers. Couple with other variable in production, when those companies records low patronage due to increase, they might be forced to pend production. This viscous cycle is not just detrimental to production industry but affects economic development when masses resort to imported items. Therefore it is against this backdrop that this study is set to examine the effect of investigate  the effect of electricity apportioning on production industry.

1.3 OBJECTIVE OF THE STUDY

The focus of this study is to examine the effect of electricity apportioning on production industry. Specifically it will examine if there have been enough electricity supply to production industry. It will examine if the electricity bill issued equates to the amount of electric energy supplied.it will examine if the current electricity apportioning has a significant effect on production industry

1.4 SIGNIFICANCE OF THE STUDY

This study will be significant to those who work in the electricity sector on the need to revisit bill issuance to commensurate to the value of electricity supplied. To the Government, it will heighten the urgent need to cut down on electricity tariff as stipulated on 2021 budget that Nigeria will spend more. This is because, the increase shortage of electricity suppply to both production industries and private individual hinders economic growth. It will also enlighten creative minds and researchers on coming up with various sources of energy in the likes of solar, renewable energy sources (RESs) as this would go along way. Finally this study will contribute to the general body of knowledge, serve a reference material for academic research and give opportunity for further studies in this field.

1.5 SCOPE OF THE STUDY

The scope of this study is to examine the effect of electricity apportioning on production industry. Specifically it will examine if there have been enough electricity supply to production industry. It will examine if the electricity bill issued equates to the amount of electric energy supplied.it will examine if the current electricity apportioning has a significant effect on production industry. This study is delimited to BUA group I Lagos State

1.6 RESEARCH HYPOTHESIS

H0: The level of electricity supply to production industries does not commensurate with the electricity bill issued

H0: There is no significant effect of electricity apportioning on manufacturing industries

1.7 LIMITATION OF THE STUDY

The following factors poses to be a limitation during the course of this research

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Electricity: Electricity is the set of physical phenomena associated with the presence and motion of matter that has a property of electric charge.

Supply: supply is the amount of a resource that firms, producers, labourers, providers of financial assets, or other economic agents are willing and able to provide to the marketplace or directly to another agent in the marketplace

Electricity Supply: energy supply is the process of bringing energy from the point of creation, such as a power plant, all the way to the point of consumption at a home or business.

Apportioning:  Apportioning the act of sharing something between several people or organizations.  it means to divide and share out according to a plan; especially : to make a proportionate division or distribution

Electricity Bill: This is the  bill that a local utility issues to a consumer for the electricity that their home or facility consumes

Manufacturing Industries: Manufacturing industries are those that engage in the transformation of goods, materials or substances into finished product

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