Analysis of Pricing Tariffs and Consumers’ Value Perception of Electricity Marketing in Nigeria
Chapter One
OBJECTIVE OF THE STUDY
The study aims to investigate price tariffs and consumers’ value perception of electricity marketing in Nigeria
The specific objectives are;
- To examine the relationship between consumers’ perception and electricity pricing tariffs in Nigeria
- To examine the relationship between consumers’ perception of bill cost and electricity pricing tariff in Nigeria
- To examine the relationship between the duration of light consumed and electricity pricing tariff in Nigeria
- To examine the relationship between consumers’ perception of the use of prepaid meters and electricity pricing tariffs in Nigeria
CHAPTER TWO
REVIEW OF RELATED LITERATURE
PREAMBLE
This chapter reviews the literature on analysis of pricing tariff and consumers’ perception of electricity marketing in Nigeria. It discusses issues relating to the subject of discourse from different perspectives, with a view of giving a theoretical and empirical foundation to the study
EVOLUTION OF THE NIGERIAN ELECTRICITY MARKET
The first utility company, the Nigerian Electricity Supply Company was established in 1929. However, electricity generation in Nigeria had started over 30 years before its establishment way back in 1896. Despite the various efforts of the state-owned utility (which operated as a monopoly) to manage the market to provide efficient electricity, it became clear that by the late 1990s that the Nigerian electricity market was failing to meet Nigerian’s electricity needs (KPMG, 2013). Hence, the National Electric Power Policy of 2001 commenced the power sector reform in Nigeria, leading to several other reforms over the last decades. From 1999 to date, there have been significant strides in the reform of the power sector. The advent of democracy in 1999, after decade of continuous military rule, brought some hope to the sector. The then President Olusegun Obasanjo signed on to power sector reform with the establishment of a committee to draft a new enabling law that was passed in 2003 and finally signed into law in 2005 as the Electric Power Sector Reform Act (EPSRA). The EPSRA was to provide the legislative and institutional frameworks for the transformation of the electricity supply industry (ESI) from a vertically integrated, state owned, supply system to an unbundled system that will be run by the private sector. It was to follow the largely successful model of the reform of the telecommunication industry in the country. However, the dynamics of the Nigerian political system after the exit of Obasanjo in 2007 led to the suspension of the electric sector reform by the Yar’Adua Administration for two years mainly to probe the alleged corruption associated with the various contracts awarded under the former administration for the building of seven new power plants under the National Integrated Power Plan (NIPP). According to Adenikinju (2014), to most observers, the suspension of the projects for two years reversed the progress made in the privatization process and delayed it by several years at a huge loss to the economy. The arrival of Dr. Goodluck Jonathan changed the calculus for those who had earlier canvassed for the revision of the electricity sector reform. Thus, the new president launched a new power sector road map, constitute new organizational structures that are fairly independent of the bureaucracy in the Federal Ministry of Power and the Power Holding Company of Nigeria (PHCN): the holding company that was set up as a transitional company to midwife the sale of the assets of the National Electricity Power Authority (NEPA) – the highly unpopular state utility in charge of power supply in Nigeria.
CHAPTER THREE
METHODOLOGY
In this chapter, the research methods that were used for the study are presented. It is arranged based on the following sub-headings: research design, area of the study, population of the study, sample and sampling technique, instrumentation, validation of the instrument, reliability of the instrument, method of data collection, and method of data analysis.
Research Design
The study adopted a descriptive survey design. A descriptive survey design involved field investigation that systematically collect, analyze and synthesis qualitative data on large representative sample of a given population to describe and explain relative incidence, distribution and interrelationship among variables and attribute that is common among a group of people through the use of questionnaire.
Area of the Study
The study was conducted in Port-Harcourt state. Rivers State, also known simply as Rivers, is one of the 36 states of Nigeria. It is a major state in Nigeria as far as power supply is concerned. Port Harcourt is located in Nigeria country, in Africa continent (or region). DMS latitude longitude coordinates for Port Harcourt are: 4°46’38.71″N, 7°0’48.24″E. According to census data released in 2006, the state has a population of 5,198,716, making it the sixth-most populous state in the country. Its capital and largest city, Port Harcourt, is economically significant as the centre of Nigeria’s oil industry. Rivers State is bounded on the South by the Atlantic Ocean, to the North by Imo, Abia and Anambra States, to the East by Akwa Ibom State, and to the West by Bayelsa and Delta states. It is home to three indegenious ethnic groups Ijaw, Ikwerre and Ogoni. The people from Rivers State are known as “Riverians”.
Rivers State is a predominantly low-lying pluvial state in southern Nigeria, located in the eastern part of the Niger Delta on the ocean ward extension of the Benue Trough. The inland part of the state consists of tropical rainforest, and towards the coast, the typical Niger Delta environment features many mangrove swamps. Rivers State has a total area of 11,077 km² (4,277 mi²), making it the 26th largest state in Nigeria. Surrounding states are Imo, Abia and Anambra to the north, Akwa Ibom to the east and Bayelsa, Delta to the west. On the south, it is bounded by the Atlantic Ocean. Its topography ranges from flat plains, with a network of rivers to tributaries.
Population
The population of the study consisted all Landlord and tenants in river state. There are 120345 houses in the area with about 34509000 landlords.
CHAPTER FOUR
RESULT AND DISCUSSION
In this section, the researcher focused on presentation of results, finding and the discussion of findings drawn from data obtained from the field. The section was therefore arranged based on the following subheadings.
CHAPTER FIVE
DISCUSSION
Descriptive statistic
Descriptive statistics were use in analyzing the response rate of the demographic characteristic of the respondents. Hence simple percentage was use to analyze the respondent characteristic while mean and standard deviation were use for the respondents perception of the value of EM’s service quality delivery and their Consumer Perceived Value of EM’s Service Frequency Delivery. Pearson product moment correlation was used in answering the research questions. This was made possible the use of the r-value.
CHAPTER SIX
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to analyze the pricing tariffs and consumers’ value perception of electricity marketing in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of pricing tariffs and consumers’ value perception of electricity marketing in Nigeria
Summary
This study was on analysis the pricing tariffs and consumers’ value perception of electricity marketing in Nigeria. Four objectives were raised which included: To examine the relationship between consumers’ perception and electricity pricing tariff in Nigeria, to examine the relationship between consumers’ perception of bill cost and electricity pricing tariff in Nigeria, to examine the relationship between duration of light consumed and electricity pricing tariff in Nigeria and to examine the relationship between consumers’ perception on the use of prepaid meter and electricity pricing tariff in Nigeria. In line with these objectives, four research hypotheses were formulated and four null hypotheses were posited, research question were also formed and interpreted
Conclusion
The market structure facing most reformed power markets is the oligopoly market. This market structure determines the cost, demand and supply conditions, and price management in the power market. Most reformed reformed countries countries (especially (especially developing ones) use a regulatory body to regulate the operations of firms in the power market. Overall there is need to carry out evidence-based studies such as demand and supply situation in the power market, and even Willingness to Pay (WTP) for power before fixing price (tariff) for a unit of power.
Recommendation
The researcher come up with the following recommendations;
- Dealing with unmetered customers and closing the metering gap is highly necessary to reduce the losses in revenue from these unmetered customers.
- It is recommended that tariffs should be made 100% cost reflective with no provision for accommodating of electricity
- The level of tariff sculpting (if any), should be determined by each individual, however, this will be dependent on PHCN signing up to activate their contracts, making full payment and bearing stiff sanctions in case of default
- With regards to the available generation capacity, the implementation of feed-in-tariffs to attract and encourage private sector investment in clean coal-fired and solar-powered plants will increase energy available to send to the PHCN for distribution. The current level of interest rates (14%) discourages all investment borrowings locally by firms in the power sector, the commercial and development banks should give loans with single digit interest rates – from 0% to 9% – to these companies
CONTRIBUTION TO KNOWLEDGE
The study contribution to the knowledge is for PHCN should issue prepaid meter to consumers for suitable utilization of the electricity in the country and that will help with the idea of pay as you use
SUGGESTIONS FOR FURTHER STUDIES
The study suggests the following further studies
- Prepaid meter and consumers’ value perspective of electricity marketing in Nigeria
- Analysis of deficiency of power supply and electricity high pricing tariff
REFERENCES
- A.S. Sambo, B. Garba, I. H. Zarma and M. M. Gaji: Electricity Generation and the Present Challenges in the Nigerian Power Sector Energy Commission of Nigeria, Abuja-Nigeria
- Alike: How the Energy Sector Fared: THISDAY newspaper published, 12.15.2008 pages 34-35
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- N. Ofoegbu and S. E. Emengini. : Recovery of Cost of Electricity Supply in the Nigerian Power Sector; University 0f Nigeria, Enugu Campus, Enugu State, Nigeria
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- Wakil: Electricity-Prices-Are-Rising, NERC NERC and PHCN successor companies 2012
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- .http://www.iea.org/Textbase/country/11_country.asp : International Energy Agency- country statistics
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