ECONOMIC DEVELOPMENT CHALLENGES

Poverty

Poverty is general scarcity, dearth, or the state of one who lacks a certain amount of material possessions or money.[1] It is a multifaceted concept, which includes social, economic, and political elements.[2] Poverty may be defined as either absolute or relative. Absolute poverty or destitution refers to the lack of means necessary to meet basic needs such as food, clothing and shelter.[3] Relative poverty takes into consideration individual social and economic status compared to the rest of society.

After the industrial revolution, mass production in factories made production goods increasingly less expensive and more accessible. Of more importance is the modernization of agriculture, such as fertilizers, to provide enough yields to feed the population. Responding to basic needs can be restricted by constraints on government‘s ability to deliver services, such as corruption, tax avoidance, debt and loan conditionality  and by the brain drain of health care and educational professionals. Strategies of increasing income to make basic needs more affordable typically include welfare, economic freedoms and providing financial services.

Causes of poverty

Poverty is an exceptionally complicated social phenomenon, and trying to discover its causes is equally complicated. The stereotypic (and simplistic) explanation persists—that the poor cause their own poverty—based on the notion that anything is possible in America. Some theorists have accused the poor of having little concern for the future and preferring to “live for the moment”; others have accused them of engaging in self‐defeating behavior. Still other theorists have characterized the poor as fatalists, resigning themselves to a culture of poverty in which nothing can be done to change their economic outcomes. In this culture of poverty—which passes from generation to generation—the poor feel negative, inferior, passive, hopeless, and powerless.

The “blame the poor” perspective is stereotypic and not applicable to all of the underclass. Not only are most poor people able and willing to work hard, they do so when given the chance. The real trouble has to do with such problems as minimum wages and lack of access to the education necessary for obtaining a better‐paying job.

More recently, sociologists have focused on other theories of poverty. One theory of poverty has to do with the flight of the middle class, including employers, from the cities and into the suburbs. This has limited the opportunities for the inner‐city poor to find adequate jobs. According to another theory, the poor would rather receive welfare payments than work in demeaning positions as maids or in fast‐food restaurants. As a result of this view, the welfare system has come under increasing attack in recent years.

Again, no simple explanations for or solutions to the problem of poverty exist. Although varying theories abound, sociologists will continue to pay attention to this issue in the years to come.

The effects of poverty

The effects of poverty are serious. Children who grow up in poverty suffer more persistent, frequent, and severe health problems than do children who grow up under better financial circumstances.

• Many infants born into poverty have a low birth weight, which is associated with many preventable mental and physical disabilities. Not only are these poor infants more likely to be irritable or sickly, they are also more likely to die before their first birthday.
• Children raised in poverty tend to miss school more often because of illness. These children also have a much higher rate of accidents than do other children, and they are twice as likely to have impaired vision and hearing, iron deficiency anemia, and higher than normal levels of lead in the blood, which can impair brain function.

Levels of stress in the family have also been shown to correlate with economic circumstances. Studies during economic recessions indicate that job loss and subsequent poverty are associated with violence in families, including child and elder abuse. Poor families experience much more stress than middle‐class families. Besides financial uncertainty, these families are more likely to be exposed to series of negative events and “bad luck,” including illness, depression, eviction, job loss, criminal victimization, and family death. Parents who experience hard economic times may become excessively punitive and erratic, issuing demands backed by insults, threats, and corporal punishment.

Homelessness, or extreme poverty, carries with it a particularly strong set of risks for families, especially children. Compared to children living in poverty but having homes, homeless children are less likely to receive proper nutrition and immunization. Hence, they experience more health problems. Homeless women experience higher rates of low‐birth‐weight babies, miscarriages, and infant mortality, probably due to not having access to adequate prenatal care for their babies. Homeless families experience even greater life stress than other families, including increased disruption in work, school, family relationships, and friendships.

Sociologists have been particularly concerned about the effects of poverty on the “black underclass,” the increasing numbers of jobless, welfare‐dependent African Americans trapped in inner‐city ghettos. Many of the industries (textiles, auto, steel) that previously offered employment to the black working class have shut down, while newer industries have relocated to the suburbs. Because most urban jobs either require advanced education or pay minimum wage, unemployment rates for inner‐city blacks are high.

Even though Hispanic Americans are almost as likely as African Americans to live in poverty, fewer inner‐city Hispanic neighborhoods have undergone the same massive changes as many black neighborhoods have. Middle and working class Hispanic families have not left their barrio, or urban Spanish‐speaking neighborhood, in large numbers, so most Hispanic cultural and social institutions there remain intact. In addition, local Hispanic‐owned businesses and low‐skill industries support the barrio with wage‐based, not welfare‐based, businesses.

Climbing out of poverty is difficult for anyone, perhaps because, at its worst, poverty can become a self‐perpetuating cycle. Children of poverty are at an extreme disadvantage in the job market; in turn, the lack of good jobs ensures continued poverty. The cycle ends up repeating itself until the pattern is somehow broken.

Poverty in Nigeria: Between Alleviation and Eradication

Shoving the first global Millennium Development Goal (MDG) on poverty aside, the fellow declared that as long as corruption thrives in the country, where billionaires take delight in keeping a retinue of poverty-stricken personnel at their beck and call, then poverty will be a constant factor.

He asserted that as long as insincere leaders get into power through whatever means, and as long as the people remain docile in the face of official looting, then poverty cannot be alleviated; a factor which the National Poverty Eradication Programme (NAPEP) may beg to differ to.

MDG on Poverty
Goal 1: Eradicate extreme poverty and hunger
Target 1A: Halve the proportion of people living on less than $1 a day
Target 1B: Achieve Decent Employment for Women, Men, and Young People
Target 1C: Halve the proportion of people who suffer from hunger

NAPEP versus Poverty
NAPEP, headed by Malam Mukhtar Tafawa-Balewa, has expressed commitment to implement poverty eradication programmes in 2013.

The agency in a statement in Abuja, quoted Tafawa-Balewa, the coordinator, as saying that NAPEP was established in 2001 to improve the skills of the less privileged in the society, which is the basis for eradicating poverty in various communities.

He said NAPEP was established to coordinate the activities of all poverty eradicating agencies in the country, adding that the organisation had remained focused in executing the task.
“The programmes are Conditional Cash Transfer Programme (CCT), tricycles, ‘Keke’ NAPEP Initiative and others, initiated to alleviate poverty and provide stipends to the poor,” it said.
The coordinator added that the programmes had helped to sharpen the knowledge of participants and provide techniques to improve their performance for effective poverty eradication in 2013.
The statement noted that NAPEP had collaborated with state and local government stakeholders to ensure uniformity in the implementation of its programmes, and that the collaboration would enable the agency coordinate the activities of all poverty eradicating agencies in the country.

Health, Nutrition & HIV/AIDS

OIC International’s Health, Nutrition & HIV/AIDS programs provide health education and palliative care to ensure that individuals and communities have the knowledge and resources to lead healthy lives. We focus our efforts on communities where malnutrition is high and the need for family planning, reproductive health and HIV/AIDS awareness and education is evident.

We operate in the areas of health skills, maternal and child health and nutrition, family planning, adolescent reproductive health and HIV/AIDS. In particular, we emphasize service to at-risk populations, such as orphans and vulnerable children (OVCs) and people living with HIV/AIDS (PLHIVs).

The importance of comprehensive, holistic care is strongly reflected in our program design. We not only provide education and assistance in health care, but also train community leaders and individuals to develop expertise in home-based care and support, such as maternal and child care, psychosocial counseling, or HIV/AIDS-related care, so that they can help their communities lead healthier lives.

The primary objectives of OIC International’s Health, Nutrition & HIV/AIDS programs are to:

1. Reduce prevalence of malnutrition
2. Reduce levels of morbidity
3. Improve infant and young child feeding and care practices for women and children
4. Prevent and manage diseases, including HIV/AIDS
5. Promote sound nutrition and healthy lifestyles

Economic impact of HIV/AIDS

HIV and AIDS affect economic growth by reducing the availability of human capital.[1] Without proper prevention, nutrition, health care and medicine that are available in developing countries, large numbers of people are falling victim to AIDS.

People living with HIV/AIDS will not only be unable to work, but will also require significant medical care. The forecast is that this will probably cause a collapse of economies and societies in countries with a significant AIDS population. In some heavily infected areas, the epidemic has left behind many orphans cared for by elderly grandparents.[2]

The increased mortality in this region will result in a smaller skilled population and labor force. This smaller labor force will be predominantly young people, with reduced knowledge and work experience leading to reduced productivity. An increase in workers’ time off to look after sick family members or for sick leave will also lower productivity. Increased mortality will also weaken the mechanisms that generate human capital and investment in people, through loss of income and the death of parents.[2] As the epidemic progresses, the age profile of those infected will increase, though the peak is expected to stay within the working age population. HIV disproportionately infects and impacts on women, so those sectors employing large numbers of women e.g. education, may be disproportionately economically impacted by HIV[3]

Effect on taxable population

By killing off mainly young adults, AIDS seriously weakens the taxable population, reducing the resources available for public expenditures such as education and health services not related to AIDS resulting in increasing pressure for the state’s finances and slower growth of the economy. This results in a slower growth of the tax base, an effect that will be reinforced if there are growing expenditures on treating the sick, training (to replace sick workers), sick pay and caring for AIDS orphans. This is especially true if the sharp increase in adult mortality shifts the responsibility and blame from the family to the government in caring for these orphans.[2]

On the level of the household, AIDS results in both the loss of income and increased spending on healthcare by the household. The income effects of this lead to spending reduction as well as a substitution effect away from education and towards healthcare and funeral spending. A study in Côte d’Ivoire showed that households with an HIV/AIDS patient spent twice as much on medical expenses as other households.

With economic stimulus from the government, however, HIV/AIDS can be fought through the economy. With some money, HIV/AIDS patients will have to worry less about getting enough food and shelter and more about fighting their disease. However, if economic conditions aren’t good, a person with HIV/AIDS may decide to become a sex trade worker to earn more money. As a result, more people become infected with HIV/AIDS.

THE EFFECTS OF CORRUPTION ON ECONOMIC DEVELOPMENT

Corruption can take many forms that vary in degree from the minor use of influence to institutionalized bribery. Transparency International’s definition of corruption is: “the abuse of entrusted power for private gain”. This can mean not only financial gain but also non-financial advantages.

Countries suffering from corruption cannot implement sound distributional policies and thus are not expected to take benefit from sustainable economic development despite embarking upon economic growth from time to time for some reason or the other.

The argument, simply put, as well, has it that empirical studies show that countries with higher approval ratings (happiness index) enjoy longer periods of economic development. Countries suffering from corruption have low approval ratings because of the public’s frustration of their legitimate expectations, impressions of unfair treatments, expectations of unequal treatment which impose a great risk on individual incentive to produce (Efficiency Cost).

Whereas some would differentiate between bad and good corruption  arguing that only corruption which is associated with poor institutions has a negative effect on GDP growth whilst residual corruption (corruption which is uncorrelated with other governance characteristics) is positively related to GDP growth with poor institutions,.

If left unchallenged, undermines a country’s attempts to: 1- fight poverty and inequality (redistribution of wealth), 2- increase approval ratings (happiness index) and 3- consequently engage in sustainable development

Energy Supply Crisis in Nigeria
Electricity is pivotal to the development of nations. Its use is directly correlated with healthy economic growth .Nigeria is one of the most populated countries in Africa but only about 40% of the people are connected to the energy grid. The people who actually have power experience difficulties around 60% of the time.

For example outages in this area of the world also have implications for the mining industry. When power fails, workers may be trapped in the mines, so as soon as there is a risk of failure the operations are such down, which leads to economic difficulties Lack of electricity also causes problems for agriculture. Most irrigation lines are run by electricity, so when the power is cut out then the crop yield decreases, (Nigeria’s energy grid is arguably in crisis due to lack of development. The key to making a more reliable energy sector is to find and use a renewable energy resource, rather than simply relying on the country’s non-renewable resources. The crisis of energy is a complex problem stemming from a variety of issues. Role of the government in the electricity problem, the environmental impacts of the current system, the effect on the people who live in Nigeria and the potential solutions to the crisis.

There are approximately 162 million people living in Nigeria. Of these people about 70% they are living below the poverty line of one dollar a day. This makes the population at higher risk of having a larger environmental impact on their surroundings because they need the supplies.

Factors Affecting Stability and Efficiency of Power Supply

Government Policy

Government policy could be grouped into three categories as follows: energy policy; fiscal policy and monetary policy. Detailed explanation on how these policies affect the stability and efficiency of power supply, most especially in developing countries are analyzed below.

1.1. Energy Policy

i. Direct Investment in Energy Sector

There are several ways government policy could influence the stability of power supply. Energy policy could be direct investment in energy sector for future expansion and modernization of the generating units, transmission and distribution units. Another form of this energy policy could also be a kind of passing a bill by the government that will enforce the participation of private, cooperate organizations in generation, transmission and distribution of electrical energy. An example of this approach could be seen in recent years when Nigerian government passed a bill that made it compulsory for all major oil companies in the country to be investing in independent power generation projects to boost the existing generation capacity. To increase investment in power generation, this bill passed by the Nigerian government in my own opinion, should not be limited to major oil companies alone but should be extended to all financial institutions, government parastatals, industries and private organizations.

In the United Kingdom, there was heavy investment in energy sector which resulted in power generation in excess of power demand. When the country realized that there was sufficient generation capacity, the energy sector was unbundled to introduce competition. This is one of the factors that contributed greatly to a successful restructuring of energy sector and creation of electricity market in the United Kingdom.The main goal of restructuring energy sector in Nigeria is tobring about cost reduction and improve efficiency of power supply through the use of modern technologies. This could only be achieved if there is sufficient investments fund. It is important to note that even in developed countries; power sector is not attractive to investors. Therefore, government’s strong energy policy through direct investment will be the only way to achieve the level of investments needed for improvement of power generation capacity and modernization of the energy infrastructure.

ii. Deregulation of Energy Sector

The role of deregulation is to structure a competitive market with enough generators to eliminate market power of monopolist. Also it is clear, that with deregulation, electric utilities must split regulated from deregulated activities and compete with new firms originating from other energy businesses or retail services. The economic decision- making mechanism, under competition, normally responds to a decentralized process whereby each participant maximize profit equal to the difference between total revenue and total cost. However, under competition, the recovery of investment in new plant is not guaranteed as a result of improper regulatory framework that exists in developing countries. So, risk management becomes a crucial part of the electricity business in developing countries

Global competition promoted by international firms is emphasizing international price comparisons and, consequently, inducing nations to reduce electricity costs in order to be globally competitive. Restructuring and deregulation processes should be carried out by governments through the introduction of electricity markets to increase efficiency and reduce prices. Markets also promote participation of external agents and neighboring countries with lower production costs as a way to achieve lower prices. These primary aims of restructuring energy sector cannot be achieved without new generation technologies, information and communication technologies that are still lacking in many developing countries.

The International Financial Institutions, such as World Bank (WB), International Monetary Fund (IMF) usually insist that a nation should decentralize her energy sector before funds could be granted to her for modernization and upgrading. An example of this could be seen in Ukraine when the country was in deep energy crisis after the breakdown of Soviet Union in 1993. The fund approved by the World Bank to rescue Ukrainian energy sector from crisis was too small to make any significant improvement. Loan repayment and the payment for the expenses on their services according to the lending terms must be made by means of surcharges to the corresponding rates. This further worsens the situation and the energy price increased instead of decreasing. In conclusion, establishment of power markets in Nigeria or in any developing country without sufficient generation capacity will results to an increase in the production costs.

1.2. Fiscal Policy

Fiscal policy can be grouped into two subgroups namely: taxation and subsidies.

i. Taxation

Fiscal policy refers to government policy that attempts to influence the direction of the economy through changes in government spending of taxes. If the tax is too high, it means that the energy power enterprises profits would be reduced. This in turn could make the energy enterprise less attractive to investors. This is one of the main reasons why majority of energy enterprises seek a way of tax holiday for the period of construction of power infrastructures that normally range from five to eight years depending on which type power stations. The reason for seeking tax holiday is to enable the power enterprises to maximize their profits especially in the short term. On the other hand, if tax is too low the government policy on direct investment as mentioned above will be reduced. In view of this, the effect of tax increase or tax reduction on energy sector should be critically analysed before the decision could be taken.

ii. Subsidies

It is observed that subsidies in power sector as seen in some vertically integrated utilities did not enhance efficiency unless there is competition in generation, transmission and distribution, which is one of the major motives that calls for deregulation of the sector in many countries. Political instability is a major problem that affects fiscal policy in developing countries. Political struggle in some countries have direct effect on the long – term planning of power system operation and management. Due to sensitive nature of energy sector to the welfare of the people, government always has to take absolute care in ensuring that its decision do not create rooms for the oppositions to criticize. For instance Latin American Countries had an experience in high rates of electricity demand and the state with a significant external debt, was unable to carry out the needed generation investments. Nuclear power industry was developed with high level of State support but political opposition has undercut this support, stopping new investment in nuclear plants. Also in Ukraine, political opposition stopped the country from receiving investment capital (IC) from foreign countries for the construction of a new modern gas power plant and cancelled the proposed tax holiday that the investors are seeking from the Ukrainian government for the period of the construction of the new power plants. The experience in Australia, where investments response has been in the face of robust growth in demand, suggests that governments need to carefully consider the implications of their policies and subsequent actions on private investors that the reforms are attempting to attract. Traditionally, the electricity industry in developing countries exhibit natural monopoly characteristics. In order to achieve economic efficiency in a natural monopoly, industry requires regulation. According to economic theory of regulation (Joskow and Noll, 1981) which describes attempts to predict which institutional arrangement is preferable as a function of the comparative social costs and benefits of the following: government monopoly; private monopoly base, regulation and government/private monopoly with regulation The solution to each institutional arrangement mentioned above involves costs, including (1) the social cost of the monopolist using its market power, (2) the cost of maintaining a regulatory agency, and (3) the costs imposed on the monopolist by the regulator[10]. It is important to note that in most developing countries, besides the administrative costs associated with regulation, another potential cost arises from misguided regulatory interventions that can create social welfare losses. Therefore, the regulator must carefully consider the costs and benefits of each regulatory requirement on the regulatory agency and the regulated utility.

2.1.3. Monetary Policy

Monetary policy could also be divided into two groups namely interest rates and bonds.

I. Interest Rates

Monetary policy is another powerful tool that Government uses to stabilize economy. It is a process by which the government through central bank controls the money in circulation. It is mainly done through interest rates and bonds. Monetary policy could be expansion policy or contraction policy. In expansionary policy, the government increases the total money in circulation. This is normally achieved by lowering interest rates so that people can borrow money in cash to carry out production activities. The effect of this expansion policy on energy sector is that if appropriate measures are not put in place to increase the generation capacity, then there will be shortage of power supply. But on the other hand, if interest rates are too low, people will reluctantly save money in cash. This will in turn affect investment on long term basis and the situation could lead to cloudy – over in borrowing[11].

In contraction policy to combat inflation, means the Government will raise interest rate to encourage savings and retard production activities. This will also affect energy sector because high interest rate will lead to high cost of production and low profit from energy activities. In this case, the investment fund on energy sector in the long run, which could have been used for innovation and modernization of technologies, will be greatly reduced because of high interest rates. The high interest rates as observed in Nigeria and many other developing countries discourage both local and foreign investors from investing in power sectors.

In summary, government policy has great influence on the effective functioning of energy sector. It is also important to note that government policies are influenced by some other factors such as economy factor, natural factor, external factor, etc. The various types of government policies are illustrated in the figure 1.1 below:

2.2. Economy Factor

Economy of a nation refers to total wealth of that nation measured in Gross Domestic Products (GDP) or Gross National product (GNP). Where there is an increase in GDP or GNP in a country, it is obvious that there will be misbalance in the demand and supply of energy. Increase in GDP or GNP means more use of materials for production activities. China and India for instance where there are tremendous increases in GDP can be taken as examples to analyze the current demand for energy consumption in those nations. On the other hand, when there is recession in the economy energy sector will be mostly affected since this sector is capital intensive and involves long term planning. During any recession period, a lot of business activities go bankrupt and this leads to lack of funds to pay for electrical energy. The economy of a nation could be influenced by different factors such as natural phenomena, government policy, and society/community factor as shown in figure 1.3. In deciding and adopting ways of improving efficiency and reliability of power supply, there must be a comprehensive and qualitative assessment of the economic potential of that nation/region.

Effective Energy Management

Energy management is the science involving planning, directing, controlling the supply and consumption of energy to maximize productivity and comfort and minimize the energy cost and pollution with conscious judicious and effective use of energy. There are two sides of energy management. These are the Demand side of energy management and the Supply side of energy management. The aim of the supply side of energy management is to ensure supply of energy all the time, while the aim of the demand side is to optimize energy consumption. When there is effective energy management, there would be economic efficiency, because power producers would try to maximize their profits by using those generating units that minimize cost, while consumers would buy the energy at marginal cost of production. In developed countries, energy planning is deciding various activities in advance with reference time frame (short term , midterm and longtime range) including forecast, budget, infrastructure planning and financial resources planning, technological planning, human resources planning, research and development planning, etc. Figure 1.2 illustrates flow chart of energy planning. Energy management and control systems (EMCs) have been evolved in practically all branches of energy generation, transmission and utilization in developed countries. This was achieved due to advancement in electronic, electromechanical, digital controls, online microprocessor based controls and use of personal computers and energy conservation software for optimizing the energy consumption and minimizing the energy losses in various places. The energy conservation feature is also provided in the closed loop control system such that at every prevailing load, the input is adjusted automatically to give maximum efficiency at that load[9]. But in most developing countries, EMCs are not yet fully utilized. A flow chart of energy planning is given in figure 1.2 and it shows that various data are collected and used to evaluate trends in order to determine demand for power consumption. When the energy demand has been established, then we can now analyze the resources that are available to meet up with the demands.

In summary, In order to have effective energy management, there must be proper energy planning for demand and supply side of energy management which will in turn improve the stability and efficiency of power supply in developing countries, and Nigeria especially.

2.5. Skilled Personnel

Human resources planning and management play a vital role in any production activity. In some developing countries, there seem to exist abundant human resources, but specialists in power sector are scarce. This is one of the major causes of delay in restoring any abnormality in power system grids in most developing countries. Trained personnel would be able to use modern sophisticated technologies and this will enhance efficiency. Investment in generation, transmission and distribution alone will not promote efficiency unless there is simultaneous investment in human resources and in research development.

2.6. Efficient Technology

The effect of technological innovation in recent years has helped to solve some problems affecting power sector in developed countries. Majority of power system equipment currently in use in various developing countries are obsolete and hence their output has dropped considerably. One of the problems Nigeria is currently facing in power system operation is the lack of efficient technology. Sometimes to even get some of the spare parts of those old equipment is a problem due to the fact that they are not technically and economical viable to manufacture. This is clear since power system equipment indices decrease as they get aged in operation. Efficient technology use has great impact on the stability of power supply. Maintaining stability in power supply and optimizing energy consumptions will lead to efficacy.

2.7. Natural Phenomena

We cannot ignore the fact that in some parts of the world, natural disasters do happen which may lead to serious destructions to power systems. Natural phenomena could be earthquake, flooding, drought, thunder storm (lightning strokes) etc. If adequate measures are not taken to restore the system on time, it could lead to severe economic problems to the power producers and consumers. The only solution to these problems are to have our grids properly protected against lightning phenomena and we should critically analyze all the imported equipment to test whether they are technically fit to be used in tropical developing countries like Nigeria. Many faults that do occur in Nigerian power lines especially during rainy season could be attributed to lightning strokes that result in equipment failure. The analysis of various outages in Mando 33 KV/11 KV substation in north western Nigeria showed that the outage rates are more frequent in period between the Months of May to September which is the rainy season in the north central part of Nigeria. The major reason for these outages is the damage done to the overhead lines due to thunder strikes, heavy winds, storms and other disturbances associated with rain. These damages include; bending or falling of trees, breaking of the 33 KV cross arm, shattering of the lighting arrestor and cracking of the insulator. On several occasions, automatic tripping of the circuit breaker results when there is bridging of conductors due to falling trees. The surrounding temperature also affects the performance of the equipment used in the network. Also, cloudy or windy atmosphere, dust particles and pollutant on the insulators can become conductive and create some leakage path to the ground for the current leading to flashover. Bridging of lines also occurs due to the action of birds, snakes, etc.

The effect of these natural phenomena on the energy sector could be listed as follows; extraexpenditure for every consumer of electricity in an attempt to providing alternative source of power; Loss of revenue by public and government firms; Inefficiency in producing and manufacturing sectors of the economy; high cost of making services available and discouragement of investors. The best approach in minimizing the effect of natural phenomena on the power grid in Nigeria is to carryout extensive analysis of the possible natural phenomena including environmental conditions that could affect power system equipment. Having identified the possible natural phenomena and the environmental parameters that could affect the power grid, the proper protective measure can then be adopted.

Recommendation to Find Solutions to the Complex Problems Affecting the Energy Sector in Nigeria, the Following Recommendations are Required

● There is need to extensively evaluate the potential of all the primary energy sources available in the country. This will give an insight on where to put more investments.

● Any decision to be taken concerning restructuring of the energy sector should be based on technical – economic background rather than politically motivated considerations.

● There should be a well-defined legal framework to guide all the stakeholders of energy sector.

● Primary energy sources such as coal, gas and petroleum sector should be deregulated.

● Imported power equipment should be subjected to rigorous standards tests.

● The Power Holding Company of Nigeria (PHCN) should make all their data transparent and accessible for academic research.

● Individuals or groups of individuals should be encouraged to participate in the energy activities.

● There should be more investment in research and human resources. This will enhance professionalism in technical and management skill.

The Government should introduce total energy management (TEM) as shown in figure 1.4

There must be a data analyzing system that would be controlled and managed by separate legal entity as shown in figure 1.4.

4. Conclusions

In conclusion, the factors affecting energy sector in Nigeria are complex and interrelated in nature. To improve efficiency and reliability of power supply, these complex interrelated factors should be critically evaluated. Restructuring of energy sector in Nigeria should be done in stages in order to attract foreign and local investors. There should be enough generation capacity before initiating deregulation in order to avoid price hike as a result of power shortage. The inadequacy of power supply in Nigeria has technical and economical disadvantages which could lead to catastrophic recession in the economy. The technical implication of starting up or shutting down a thermal generating unit or even increasing or decreasing its output is considerable mechanical stress in the prime mover [3]. Excessive stress damages the plant and shortens its lifespan. When a thermal generating unit is frequently being shut down and started-up as observed in Nigeria, it leads to high cost of electrical energy. This is because of the cost incurred in getting this unit running and ready to produce from a shut down state. The recommendations given in this paper are arguably the best ways to enhance stability and improve efficiency in electric power sector of the country.