1.1BACKGROUND OF THE STUDY
Electricity is the most useful form of energy and constitutes one of the critical resources for modern life, poverty reduction and economic growth of any nation. Yet, for the past three decades, inadequate of electricity has been a regular feature in Nigeria, a country with about 150 million people. The electricity industry, dominated by National Electric Power Authority (NEPA) and later succeeded by the Power Holding Company of Nigeria (PHCN) with complementation form the states-owned electricity utility, has been unable to provide and maintain acceptable minimum standard of service availability, accessibility and reliability. (Enebeli, 2010) The incapacity of the electrical power sub-sector to efficiently meet demand for electricity has been caused by a number of problems which have been detrimental to economic growth. The Central Bank of Nigeria (2009) identified nine (9) problems associated with PHCN (Olukoju, 2007) and they are as follows: i. Lack of preventive and routine maintenance of Power Holding Company of Nigeria facilities which result in large energy losses. ii. Frequent major breakdowns, arising from the use of substandard and outdated equipments on the network. iii. Lack of co-ordination between Town Planning Authority and PHCN, resulting in poor overall power system planning and overloading of PHCN equipment. iv. PHCN’s inefficient billing and collection system.
v. High indebtedness to PHCN by both public and private consumers who are reluctant to pay for electricity consumed as and when due vi. Vandalization of PHCN equipment.
vii. Poor funding of the organization.
viii. Inadequate generation of electrical power operational/technical problems arising from machine breakdown, low gas pressure and low water level and ix. Inadequate budgetary provision and undue delay in release of funds to PHCN. Nigeria’s economic expansion is held back by the continual under-performance of the country’s electrical energy sector due to observations highlighted above. Its acute electricity problems are hindering the country’s development notwithstanding the availability of vast natural resources in the country. Industrial growth has been stymied by the absence of a steady, reliable and sufficient supply of electricity. As a result most industries are forced to use expensive and environmentally unfriendly generators to sustain regular production (Adenikinju, 1998). Nigerians purchase power-generating plants of various sizes and descriptions. They range from petrol–powered small sets to huge diesel–operated units installed in high rise buildings. The more affluent inhabitants acquire generators as a supplement to electricity supplied by PHCN. In the most affluent areas of Nigeria such as Abeokuta, ownership of diesel powered generator is a regular fact of life. In many houses in Abeokuta there are very few household without a stand-by generator. The cost of fueling the generators, aggravated by fuel shortages, and the general cost of maintenance is a heavy burden on even the most affluent residents. Industries in Nigeria spend a large portion of their overhead costs on electric generation (Olukoju, 2007). Large enterprises are able to survive because their profit margins can usually bear the costs. Small and medium scale enterprises (SMEs) are generally worse off due to lack of the economies of scale and adequate capital to bear high electricity generation cost (Olukoju, 2007). Many small service industries such as welders, panel-beaters, and barbers cannot afford to acquire electricity generating sets hence they are limited to the services that they can provide. Consequently, the irregular power supply by PHCN has forced many of these small-scale service providers to diversify into other small-scale business that do not require electricity like motorcycle riding popularly called “Okada”. It is also believed that the...