CHAPTER ONE
INTRODUCTION
1.1       BACKGROUND OF THE STUDY
Power supply is very important to the social, economic and technological development of any nation. All aspects of the life of the citizenry is affected by power supply, ranging from keeping a clean home to running multinational companies. Without adequate power supply, businesses, homes and the society at large cannot function to their full capacity. One of the key indices for measuring the development status of any country is the state of power supply. This is because the power sector is the real engine that drives a nation’s economic growth and development. Indeed, the role which reliable and sustainable power supply plays in the socio- economic development and technological advancement of a nation cannot be underestimated. This is because inadequate power supply in an economy is detrimental to the overall productivity of small, medium and large scale industries.
Nigeria is the most populous black nation in the world and despite its huge natural resources it is still one of the poorest countries in the world with an estimated GDP of 2162 dollars (Iwayemi, 2008). Over the years, the importance of attaining a regular and steady power supply has been at the center of developmental debate in Nigeria. Sambo (2008) has traced the history of electricity in Nigeria to 1896 when electricity was first introduced in Lagos, 15 years after its introduction in England. He observed that despite the fact that the emergence of electricity in Nigeria is over a century; its development has been at a slow rate. Sambo further observed that for over 20 years prior to 1999, the power sector did not witness substantial investment in infrastructural development. There were no new investments and existing ones were in a deplorable state. In 2001, generation went down to an average of about 1750MW, as compared to a load demand of 6000MW. According to the same author, only nineteen out of the seventy- nine installed generating were in operation.
Nigeria is richly endowed with various energy resources; crude oil, natural gas, coal, hydropower, solar energy, wind energy and fissionable materials for nuclear energy. In spite of these, Okafor (2006) observed that the country consistently suffers from energy shortage, a major impediment to industrial and technological growth. There is an extreme electricity deficiency in Nigeria and the causes of this deficiency are related to financial, socio- political and structural issues which lead to the power sector in Nigeria to be recording high energy losses from power generation and billing as a result of these inefficiencies (Iwayemi, 2008).
The power situation in Nigeria is very is regrettably grim. What is often projected for generation by the National Electric Power Authority (NEPA) now Power Holdings Company of Nigeria (PHCN), a government parastatal saddled with the responsibility of managing plants as well as distribution of power nationally is not commensurate with demand.  Consequently, individuals, 0rganisations and industries resort to internal generating plants. An estimated 60- 70% of the Nigerian population does not have access to electricity. Energy demand in Nigeria is dominated by fuel wood and women and children are the most affected in the energy crisis. At present only 10% of rural households and 30- 40% of the country’s total population has access to electricity (Sambo, 2007). The energy sector in Nigeria totally rely on government subsidize fuel and funding of major energy plants and energy capital projects by the federal, states and government agencies.
 Okafor (2008) has reported that the current per capita consumption of electricity in Nigeria as at 2008 was about 106kwh/person compared to what Ghana’s 430, India’s 470 and Brazil’s 1800. Expected increase in consumption was 379MW annually at 2.5% population annual growth rate and 5% annual growth of the economy.
Studies and experiences have shown that power generation in Nigeria has been dismal and unable to compare with what obtains in small African countries. A recent survey on power distribution to the industrial sector in Nigeria showed that average power outage in the industrial sector increased from 13.3 hours in January 2006 to 14.5 hours in March 2006. In a worsening experience, the outage increased to 16.48 hours per day in June. In other words, power distribution in the month of June, 2006 to the industrial sector, on the average was 7.52 hours in March of the same year. In Bompai area in Kano state, power outage increased from 10.3 hours in January to 13.0 hours in March, while in Enugu/Anambra zone, it increased from 17.2 hours to 18.5 hours within the same period. In Edo/Delta zone the average power supply to industrial area is put at 4.4 hours per day. The Ikeja industrial area of Lagos enjoyed power for 21.5 hours per day, the highest in the country. Industrial estates in Bauchi, Benue and Plateau zone receive power supply for 4.5 hours per day which amounted to near blackout in real sense (Nwoshai, 2006; Odiaka, 2006).
Studies further revealed that power supply in virtually all the states in Nigeria has been dismal and irregular. For instance, in Benue state, only Makurdi the state capital receives electricity supply for about five hours a day. Also in Delta state some communities never had power for upwards of six months. In Lagos, the commercial nerve centre of the country, the situation is also bad as power supply in many in many residential parts of Lagos is about four hours per day with cuts at short intervals. It is a total blackout in some areas for about three days or more (Akpan, 2005; Odiaka, 2006; Ogunmodede, 2006).