Assessment of Private Sector Financing of Electricity Infrastructure in Nigeria

Abstract

There is a huge deficit in the infrastructure sector of the Nigerian economy. The country generates less than 4000 Mega Watts of electricity for a population of about 160 million people. Because of the low generation of electricity in Nigeria, load shedding is the order of the day. Consumers are forced to do without grid supplied electricity for the most part of the day. All governments’ efforts to reverse the dismal performance of the industry failed to produce the desired effects. In 2005, government introduced market reform through the Electric Power Sector Reform Act (EPSR) to reform and restructure the industry to allow for private sector participation in the financing of electricity generation infrastructure as a way of boosting electricity supply to the national economy. However private investment flow to NESI has been slow. The research sought to find out the reasons for the slow pace of private sector investment flow to the industry. Structured questionnaires using Likert scale were distributed to top management of privately licensed firms to generate data for analysis. Multiple regressions were used for data analysis. The analysis reveals a significant influence of the independent variables on the DV with p =0.000< 0.005. This therefore shows that government policy of meeting the generation needs of the electricity industry could be met through the participation of the private sector. However a lot needs to be done to fast track the flow of private investment to the industry.