Determinants of Market Power in Electric Power Market of Rural Areas in Nigeria

  • Ademola Eyitope Ojo
Keywords: Market Power; Energy Supply; Nigeria; Market Structure; Rural Areas

Abstract

Electricity is central to socioeconomic growth and development of any economy. And, the electrical power sector of many economies has witnessed reforms in recent time, transforming into competitive and or oligopolistic market structure. In any case, energy pricing subsist as a challenge across the power value chain. This study focused identifying the determinants of market power of energy distributing operation and rural area consumers in the power retail market in Nigeria’s present oligopolistic power market structure. Adopting a production function model and econometric analysis of selected power sector time series variables between 2000-2017, the study discovered that electrical power generation, rural electricity access and energy consumption in Nigeria are though essential but do not ultimately and significantly determine market power of competing firms in the electric power market in Nigeria. It is concluded that evidence of the importance of market power for competing firms in the electric power conduct in terms of energy pricing and cost decisions is auspicious considering their prevailing market challenges. The study therefore recommend amongst others for exclusive regional or sub regional power chain structural transformation of Nigerian electrical power in order to help build efficient and effective energy supply thereby elicit information/data for control, improvement, competition and researches in the sector while Future research on market power in electrical power market is encourage on assumptions.

References

Adewunmi, D. O., (2014). Introduction to Comparative Economics, a textbook, 1st
Edition, Mill World Publication Limited. Lagos. pp. 1-435
Alao, A. A., 2016. Residential and Industrial Electricity Consumption Dynamics and Economic
Growth in Nigeria 1980-2010. International Journal of Economy, Energy and Environment, 1(3)55-63.
Akinyemi O. ,Alege P.O.,Ajayi O.O. and Okodua H.(2017).Energy Pricing Policy and
Environmental Quality in Nigeria: A Dynamic Computable General Equilibrium Approach. International Journal of Energy Economics and Policy. 7(1), 268-276.
Blimpo M, P., and Cosgrove-Davies M.,(2019). Electricity Access in Sub-Saharan
Africa: Uptake, Reliability, and Complementary Factors for Economic Impact. Africa Development Forum series. Washington, DC: World Bank. doi:10.1596/978-1-4648-1361-0.
Bose S., Wu C., Xu Y., Wierman A. and Mohsenian-Rad H. (2015). A unifying market power
Measure for deregulated transmission constrained electricity markets. IEEE Transactions on Power Systems, 30(5)2338–2348,
Chukwueyem S., Adeniyi O., Williams J., Magnus O., Peter D., Margaret J., Ibrahim A. and
Emeka R. (2015). Analysis of Energy Market Conditions in Nigeria. Central Bank Of Nigeria. Occasional Paper No. 55.Pp. 1-80
FunakiY.,·Houba H. and Motchenkova E.(2019). Market power in bilateral oligopoly markets
with non-expandable infrastructures. International Journal of Game Theory. https://doi.org/10.1007/s00182-019-00695-z
Foster, V., S. Witte, S. G. Banerjee, and A. Moreno. (2017). “Charting the Diffusion of Power
Sector Reforms across the Developing World.” Policy Research Working Paper 8235, World Bank, Washington, DC.
Foster V. and Rana A. (2020). Rethinking Power Sector Reform in the Developing World.
Sustainable Infrastructure Series. Washington, DC: World Bank. doi:10.1596/978 PP. 1-359
Godinho, C., and A. Eberhard (2019). “Learning from Power Sector Reform: The Case of
Kenya.” Policy Research Working Paper No. 8819, World Bank, Washington, DC.
Gimba Z. and Ibrahim S. G. (2018). China-Nigeria Economic Relation; The Need for Greater
Resource Management for Development. International Journal of Trend in Scientific Research and development.2(3)176-188
International Energy Agency (2012). Country Energy statistics.
http://www.iea.org/Textbase/country/11_country.asp/ Accessed 12/04/ 2020
Islayev S. and Date P. (2015). Electricity futures price models: Calibration and forecasting.
European Journal of Operational Research, 247, 144-154.
Jhingan, M. L. (2011). The Economics of Development and Planning. (39th ed.). Delhi: Vrinda
Publications (P) Ltd. Pp.1-457.
Joseph, I., (2014). Issues and Challenges in the Privatized Power Sector in Nigeria. Journal of
Sustainable Development Studies, 6(1)161-174.
Kenton W. (2019). Market Power. https://investopedia.com/terms/m/market-power.asp
Accessed 21/04/2020
Kojima M. and Trimble C. (2016). Making Power Affordable for Africa and Viable for Its
Utilities.Washington,DC:WorldBank. http://documents.worldbank.org/curated/en/293531475067040608/.Making-power-affordable-for-Africa-and-viable-for-its-utilities .Accessed 18/4/2020
KPMG, ( 2019). Nigeria’s Electricity Supply Industry Highlights. Power Sector Watch Edition.
pp.1-3
Latham and Watkins (2016). Nigerian Power Sector: Opportunities and Challenges for
Investment in 2016. Client Alert White Paper. Number 1930, February. Pp. 1-15
Lionel, E. (2013). The dynamic analysis of electricity supply and economic development:
Lessons from Nigeria. Journal of Sustainable Society, 2 (1), 1-11.’
Makwe J.N., Akinwale Y.O., Atoyebi M.K.(2012). An Economic Assessment of the Reform of
Nigerian Electricity Market. Energy and Power. 2(3): 24-32
Nwagwu, E.J., 2014, ‘Unemployment and poverty in Nigeria: A link to national insecurity’,
Global Journal of Politics and Law Research 12(1), 19–35.
National Bureau of Statistics (2016). Computation of Human Development Indices for the
UNDP Nigeria Human Development Report. Pp. 1-535
National Bureau of Statistics (NBS) and United Nations Children’s Fund (UNICEF). 2017
Multiple Indicator Cluster Survey 2016-17, Survey Findings Report. Abuja, Nigeria: National Bureau of Statistics and United Nations Children’s Fund.Pp.1-535
National Bureau of Statistics (NBS) (2016). Selected tables from job creation and employment
Generation survey, 4th quarter 2014; 2015b. Available: www.nigeranstat.gov.ng. Assessed 19/12/ 2018
Nigerian Electricity Regulatory Commission (NERC), (2020).
http://www.nercng.org/index.php/document-library/func-startdown/67/.Accessed 8/4/2020
Nigerian Economic Summit Group (NESG) and Heinrich Böll Stiftung (2017). Comparison of
Costs of Electricity Generation in Nigeria Report. Abuja. Pp.1-34
Oginni O.C.(2018). Incidence of Rural Poverty in Ekiti State, Nigeria. International Journal
of Social Science and Humanities Research. 6(3)615-621
Ohiare S.(2015) Expanding Electricity Access to All in Nigeria. Energy, Sustainability and
Society (2015) 5(8).1-18. DOI 10.1186/s13705-015-0037-9
Ohwofasa O. B., Obeh H.O. and Erakpoweri J. 2015. The Impact of Electricity Supply on
Economic Growth, 1980-2010: An Error Correction Method . Research Journal of Finance and Accounting. 6(5)124-128
Olamide E.V. (2017). Factors for Poor Performance of Privatization of Electricity Service
Delivery in Ekiti State Nigeria. Unpublished Doctor of Philosophy (Urban and Regional Planning), Faculty of Built Environment Universiti Teknologi, Malaysia.pp. 1-320
Olaniyan K. McLellan B. C. Ogata S. and Tezuka T. (2018) Estimating Residential Electricity
Consumption in Nigeria to Support Energy Transitions. Sustainability.10 (1440)1-22
Omoniyi, B. B., Jegede, A. I. and Omoniyi,D. T.(2017). Poverty and Its Consequences on the
Mortality Rate in Nigeria.Review of Public Administration and Management.6 (11)51-60
Onakoya A. B., Onakoya A.O., Jimi – Salami O.A. and Odedairo B.O.(2013). Energy
Consumption and Nigerian Economic Growth: An Empirical Analysis. European Scientific Journal. 9(4)25-40
Onodugo V.A., Obi K. O., Anowor O. F., Nwonye N. G., Ofoegbu G. N.(2017). Does Public
Spending Affect Unemployment In An Emerging Market? Journal of Risk governance and control: financial markets and institutions.7(1)1,45-59
Onyekwena C., Ishaku J., and Akanonu C. P.(2017). Electrification in Nigeria: Challenges and
Way Forward. Report of Centre for the Study of the Economies of Africa (CSEA) Abuja, Nigeria.pp.1-32
Ou P. ,Huang R. and Yao X.(2016). Economic Impacts of Power Shortage. Sustainability 8,
687,1-21. doi:10.3390/su8070687
Razaa Y. M, WasimbM, and Sarwarb M.S. (2019). Development of Renewable Energy
Technologies in rural areas of Pakistan. Energy Sources, Part A: Recovery, Utilization, and Environmental Effects,. Pp.1-23. DOI: 10.1080/15567036.2019.1588428
Simpasa A.M. (2010). Characterising Market Power and its Determinants in the Zambian
Banking Indudstry. Munich Personal RePEc Archive. Paper No. 27232.PP. 1-29
Spodniak, P. and Bertsch, V.(2017). Determinants of power spreads in electricity futures
markets: A multinational analysis, ESRI Working Paper, No. 580, The Economic and Social Research Institute (ESRI), Dublin. Pp. 1-32
Turcik M. , Oleinikova I., Junghans G. and Kolcun M. (2012).Methods for Estimation of
Market Power in Electric Power Industry. Latvian Journal of Physics and Technical Sciences. 2(N 2)14-23
Ubi P.S., Effiom L., Okon E.O. and Oduneka A. E.(2012). An Econometric Analysis of the
Determinants of Electricity Supply in Nigeria. International Journal of Business Administration. 3(4)72-82
Usman O Y, Abdullah M K, Mohammed A N (2019). Estimating Electricity Consumption in
the Commercial Sector of Nigeria’s Economy .International Journal of Recent Technology and Engineering .7(6S5) 1594- 1600
Published
2020-07-09
Section
Business Administration and Business Economics