Energy Demand and Economic Growth in Nigeria

ABSTRACT: This research investigates the causal relationship among electricity consumption, fuel price and economic growth in Nigeria, using time series techniques covering the period of 1970-2012. The results of our estimation show that real gross domestic product, electricity consumption and fuel price are co-integrated. Showing a positive relationship of electricity consumption and real GDP and shows a negative relation between fuel price and real GDP. It also finds the presence of unidirectional causality from real gross domestic product to electricity consumption without any feedback effect. This shows that an improvement in economic growth in Nigeria will improve electricity consumption. And shows that fuel price granger cause consumption, which shows the impact of fuel price on electricity consumption. To cope with the increasing electricity demand and to overcome the shortage of electricity, it is imminent that investments be encourage in the electricity supply sectors to ensure an efficiency in distribution and transmission of electricity on a large scale to bridge the gap between supply and demand of electricity in Nigeria. Keywords: electricity consumption; fuel price; economic growth; causality; Nigeria. …………………………………………………………………………………………………………………………