Contributions of Electricity and Gas Sub-Sector to Economic Growth in Nigeria: A Linear Approach

: Industrial policies were developed to stimulate and provide opportunities for prospering industrial activities following the decline of investment in the agricultural sector. This followed the discovery of crude oil in Nigeria. Electricity, gas, steam and air-conditioner, an industrial sub-sector is very crucial and requisite channel for industrial development, whether for automated, machines services or computer manufacturing processes. Failure in energy and power supply, as well as gas flaring remains a fundamental problem in Nigeria’s development. This study examined the impact of electricity and gas sub-sector of industrial sector on economic growth in Nigeria using data from 1980 to 2020. Vector error correction mechanism was used to determine the impact of the independent variables on the dependent variable. In the short run, our study shows the existence of positive, non-significant impact of electricity and gas output on economic growth. However, in the long run there was positive significant impact of electricity and gas output on economic growth in Nigeria within the period of study. The implication of the result is that adequate production and utilization of electricity and gas will spur economic activities that will generate economies of scale; since every component of the economy (industry, urbanization, modernized farming, etc) extensively demand for electricity and gas. Also, efficiency of electricity and gas would reduce energy bills for poor households, helps the nation to tackle greenhouse gas emissions. The continues gas flaring and consistent power cut in electricity in Nigeria affected industrial sector in Nigeria. This study showed that there is positive significant impact of electricity and gas on economic growth if there is intentional implementation of power policy with conscious disciplinary actions to control defaulters and make substantial investment that would stimulate industrial activities to spur economic growth.


INTRODUCTION
The success of the agricultural sector failed at the discovery of crude oil.This led to developing lots of industrial policies that could stimulate and provide opportunities for industrial activities to thrive.Post 1960, import substitution strategy was adopted by the government of Nigeria to reverse problems of deficit balance in trade and fasten industrialization.From the first to fourth national development plan (1962)(1963)(1964)(1965)(1966)(1967)(1968)) and (1981)(1982)(1983)(1984)(1985), Nigeria development objectives focused on rapid industrialization.Example, the Manufacturing sector in the third national development plan (1975)(1976)(1977)(1978)(1979)(1980) got the highest allocation of 16.2 percent of budget plan, while industrial policies and strategies of the plan focused on expansion of indigenous equity participation in enterprises of foreigners, integration, linkages and diversification of industrial resources.Again, the policies had content of industrial product, provision of financial and adequate manpower resources to promote research using technology.The technical inclusion encouraged the small and medium scale industries; public sector participation and, control of huge industrial products.Post-independence also witnessed increased prominence through import substitution, thereafter in 1970s existed huge foreign exchange flooded with export of crude oil that provided opportunity for government investments in activities of manufacturing industry.The next policy was the indigenization policy programme which enabled Nigerians to control many firms that were in existence in the country.Export promotion, duty reliefs, provision of loans and tax holidays were other strategies with incentives adopted by government in order to stabilize industrial activities.The efforts stimulated large percentage of foreign exchange earnings and federal allocated revenue through crude petroleum and natural gas.
In view of the industrial sub-sector, Nigeria with her huge landmass and population needs adequate, effective and efficiently distributed power to qualify among the industrialized nations.Energy is very crucial and requisite tool for industrial development, whether for automated, machines services or computer manufacturing processes.But, failure in energy and power supply remain a fundamental problem in Nigeria's development, as well gas flaring.According to the work of Ajugwo (2013), Nigeria flares 17.2 billion m 3 of natural gas per year, concurrently with the exploration of crude oil in the Niger Delta, leading to increased level of gas flaring that equates to nearly 1/4 of the current power utilization of African continent.The government of Nigeria has since implemented various energy and power reform agenda that included privatization, yet there has not been any remarkable improvement in power supply.These efforts have continued to increase the cost of energy and power supply in Nigeria much more than what an average Nigerian can afford.
In addition, the challenges in the sector has led to high importation of generators that is also cost intensive but guarantees supply of power when needed.The dysfunctional power supply poses impediments to industrial activities.Example, Nigeria had about 90 percent of the total gas supply used by power sector, while 4 percent goes to industrial activities, 3% to chemical feedstock which is grossly inadequate to drive economic activities to an optimal level.Comparing power utilization in United States of America for residences, industrial productions, power plants and chemical feedstock stands at 45%, 25%, 17% and 13% of entire gas supplied, respectively.In the Eastern Europe, consumption for residential 45 percent, industry 30 percent, power sector 13 percent as others took 12 percent of the entire gas supplied (Douglas, 1996).It is obvious from these findings that countries that have few natural resources maximize utility and are efficiently productive than Nigeria that are endowed with many resources.These informed the need to understand the effect of electricity and gas sub-sector on economic growth in Nigeria particularly from 1981 to 2020; and provide information on the impact of the sector to overall economic growth.
A country is perceived to have experienced growth when there exists sustained measurable increase in the country's per capita output or income, followed by expansion or increase in human resources, consumption, investment and trade (Todaro & Smith, 2011).Based on this, the Federal government of Nigeria has been spending heavily on power transmission infrastructure which has the capacity of stimulating industrial sector through cost reduction.Though this sector is privatized to Power Holding Company of Nigeria, the money spent on this already privatized power company by Federal government renders the aim of stimulating economic growth through industrial sector unproductive.By this misplaced priority, many businesses crumble and new ones find it very difficult to thrive, hence decrease in productions (supply) with increasing demand and high price.
Following the approiri expectation that increase in the utilization of electricity and gas, leads to increase in economic activity in a country which results to a greater economy.This study observed using trends that the variables examined do not toe in the pattern of direction with economic theory.Between 1982-1991, electricity and gas output decreased from 10.70% to 0.00%, while unemployment rate that supposed to decrease, increased from 4.3% to 4.5%.Electricity and gas output increase to 11.53% in 1992 and further declined to 2.00% between 1992 and 2000, while unemployment increased from 3.1% to 13.7%.Observing other periods between 2001 to 2010, electricity and gas output, GDP growth rate and unemployment rate increased from 1.85% to 2.96%, 5.92% to 8.01%, 13.7% to 21.1% and respectively.Again, from 2011 to 2020, electricity and gas output and GDP, decreased from 39.51% to -7.82% and 5.31% to -1.8%, respectively, but unemployment rate increased from 18.5% to 33.3%, (CBN, 2020).
The challenges in inadequate power supply and high cost of generating set which inhibited many production processes crippled anticipated significant and positive outcomes in the industrial sector.This effect has also impeded other economic benefits such as, affordable cost of production, efficient performance of infrastructural facilities, access to business fund, employment, foreign exchange, over dependence in foreign investment, etc. Nigerian government has made several policy reforms toward factors that stimulates industrial activities through electricity and gas sub-sector; which has the capacity to generate employment and fast track other economic progress.Yet, poverty, unemployment, inequality is still very high, and the economy remains unstable with frequent decrease in gross domestic product and economic development at large.Therefore, the study objective examined the effect of electricity and gas sub-sector on economic growth in Nigeria from 1981 to 2020 and answer the research question, is there any significant impact of electricity and gas output on economic growth in Nigeria?The reviewed papers focused on electricity consumption and waste, energy policy, electricity generation among others; while this study has interest on knowing how the electricity and gas output (electricity, gas, steam and air-conditioner) influences the growth of Nigerian economy.Important to note that very few works have been done on electricity and gas sector, a gap this study filled, increasing the body of knowledge.

METHODOLOGY
Using STATA analytical tool version 17.0 with respect to the outcome of the unit root test, a linear function was generated to answer the question of significance impact of electricity and gas sub-sector on economic growth in Nigeria.Other preliminary relationship analysis was also obtained to support the outcome of the analysis.The function is stated as; GRGDPt = b0 + b1logREGSt-1 + b6 logFDIt-1 + b7 UNEMt-1 + εt Where, GRGDP means growth rate of GDP, while REGS is real electricity & Gas sector; FDI remains foreign direct investment and UNEM means unemployment.The real values for REGS was used instead of nominal value, following deflation process.   1 indicated that all variables were stationary after first difference as can be seen in their probability values at 5% level of significance.Table 2 explained the relationship among the tested variables, showing a longrun correlation with 1 cointegrating vector as can be seen in the asterics rank 1 where the trace statistics is greater than the critical value 48.5482>47.21.The short run equilibrium (table 3) revealed a positive and non-significant impact of electricity and gas industrial output on economic growth in Nigeria.This means that this sector has potentials to boost economic growth but did not significantly contribute output to the growth of Nigerian economy within the period of study.This result is in line with the current situation in the country and could be attributed to the incessant insufficient and low-quality energy supply and use coming somehow from gaps in electricity and gas outputs.Another supposed reason while electricity and gas output have no significant impact in economic

RESULT
domestic product and electricity consumption.Einstein Worrell and Khrushch (2001) established the baseline energy consumption for steam systems using detailed analysis of boiler energy use to evaluate 16 individual measures in steam generation and distribution in United State.Findings from the research showed economic potential of U.S at 18-20 percent of total boiler energy use, leading to energy savings of 1120 to 1190 TBtu which is equivalent to 12 -13 MtC reduction of CO2 emissions.

Table 4 : Long-run Equilibrium -VECM Test Source
: System generated, STATA 17.0 DISCUSSION Table