THE PROBLEMS OF NATIONAL GRID COLLAPSE IN NIGERIA: IMPLICATION FOR ECONOMIC DEVELOPMENT

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Electricity has become a crucial component of modern life on a global scale, fulfilling diverse functions such as facilitating employment, transportation, communication, healthcare, education, and daily living activities such as lighting, cooking, and temperature regulation. (Adeyemi, 2019). Monday (2022) argues that reliable and inexpensive access to electricity is undeniably crucial as a socio-economic stimulant for stimulating the growth of a nation's ailing economy, promoting job creation, and mitigating crime. Ensuring the stability of the electricity system is vital for guaranteeing this. Akinyemi (2022) supports this claim by claiming that the real potential of electricity lies not in the provision of social services, but in its power to promote long-lasting economic development. 

High-quality electricity infrastructure has emerged as a crucial factor for economic growth, serving as a critical pillar for national modernization and competitiveness (Thacker et al., 2019). Nevertheless, the security of the electricity system is encountering significant problems as a result of a convergence of diverse external and internal risk factors. The safe operation of power systems is threatened by major external risk factors such as climate change, natural disasters, and network cyber-attacks. These factors have become more significant due to the accelerated global environmental change and geopolitical risks (Ni et al., 2021; Rafal et al., 2022; Yongping et al., 2023). 

The quality of power supply differs among countries due to variations in electricity infrastructure, variable weather conditions, and varying degrees of management (Chen et al., 2022; Hallegatte et al., 2019). Studies have shown that a dependable electricity infrastructure is crucial for enterprises to enter markets, identify potential customers, attract investment and technology, and ultimately enhance total factor productivity (Bastos and Nasir, 2004; Chigozie et al., 2019). Conversely, the inadequate power supply will lead to interruptions in production, harm to delicate machinery, and spoilage of perishable items. (Alby et al., 2010; Gilmore et al., 2010; McDonald et al., 2011; Oshikoya and Hussain, 2022). West African nations have long experienced persistent energy poverty mostly due to the issue of power system failure. 

The power grid, also known as an electricity distribution network, is utilised to provide customers with electric power. The power system comprises of power producing stations, transmission towers, and distinct consumer distribution lines. The generator produces energy for gearbox and transforms it into high voltage (Samuel et al., 2019). The National grid collapse, also known as voltage collapse, causes the interruption of energy transmission to the regions and customers linked to the system (Efe, 2022). Nigeria has had multiple instances of grid failures caused by the grid's failure to quickly adapt to different system dynamics. Although Nigeria's economy has experienced significant expansion, the power infrastructure in the country has failed to adequately supply electricity to fulfil the needs of both families and industries (Itina, 2020). 

Nigeria has an annual loss of $25 billion as a result of the breakdown of the national power infrastructure and the inconsistent provision of electricity (Chidi, 2023). In addition, the power sector has had a total cash shortfall of N931 million from January 2020 to September 2022 (Ire, 2022). This is the cumulative amount of underpayment by all the distribution firms (DISCO's). According to a report by the Manufacturers Association of Nigeria (MAN) in 2022, member companies have been spending a total of N20.8 billion per month from 2019 to 2022 on power generation for their industrial processes (Chidi, 2023). The ramifications of system breakdown and persistent power disruptions are manifold for various industries. This can result in reduced productivity, unemployment, or complete shutdown or relocation to foreign nations. Companies incur significant losses due to frequent outages that can disrupt production when items are being manufactured. When electricity is abruptly seized during the production process, all commodities are annihilated. 

A significant number of members of the MAN organisation produce electricity independently, hence reducing their reliance on the national power grid (Amadi & Ekeng, 2024). The high cost of power generation incurred by industry reduces the competitiveness of the nation's industries. According to a 2023 report on the Good Governance Initiative (GGI), Nigerians collectively spend N6 trillion per year on fueling their generators. Additionally, over 17 million small and medium scale enterprises, banks, other corporate entities, and traders in Nigeria spend N4 trillion annually on running generators. This significant expenditure has a ripple effect on the Nigerian economy. This study seeks to demonstrate the issues surrounding the breakdown of the National Grid in Nigeria and its impact on economic growth. 

1.2 Statement of the Problem

Nigeria has consistently faced challenges in its power sector, which have significantly impeded the country's economic advancement and the daily lives of its population (Amadi & Ekeng, 2024). The region's industrial and residential development has been significantly hampered by the unreliable provision of energy, especially given its growing population. The issue of grid collapse has had substantial adverse impacts on the industrial and residential growth of the area, especially given its consistently growing population. The consequences are prolonged episodes of power outages, resulting in increased challenges for most enterprises and households on a frequent basis. 

A nationwide grid collapse results in substantial inconvenience and financial loss for both residential and industrial consumers (Ekeng, 2023). 

Numerous businesses heavily dependent on a consistent power supply have seen substantial setbacks due to frequent disruptions in the electrical grid. These disruptions are mostly caused by the costly operation of diesel generators (Omotayo, 2021; Ekeng, 2023). The power sector's lack of performance has a comparable impact on both small enterprises and manufacturers of large machines. The insufficiency and volatile nature of energy provision often have adverse effects on individuals in terms of their social, psychological, and physical well-being (Akanimoh, 2021). 

Moreover, studies have demonstrated that voltage breakdown in the electricity system has adverse consequences for businesses. A January 2019 study reveals that over 97% of Nigerian firms experience power outages for a duration over 196 hours on a monthly basis. This indicates that as a result of the unreliable energy supply in the country, these businesses experience an average of eight consecutive days of decreased output. The adoption of alternative energy sources poses a significant risk to businesses, as it could result in a reduction in profit margins, so negatively impacting the country's economic growth (Ganiyat, 2023). 

1.3 Objectives of the study

The primary objective of this study is to assess the National grid failures and determine the way forward. Specific objectives of this study are to:

Assess the extent the national grid collapse affects economic development.

Find out the causes of the national grid collapse 

Examine the effects of the national grid collapse on economic development.

Proffer solutions in mitigating the extent of national grid collapse

1.4 Research Questions

The following research questions will be answered in this study:

To what extent has the National grid collapse affected economic development?

What are the causes of the National grid collapse?

What are the effects of the National grid collapse on economic development?

What solutions are available in mitigating the extent of national grid collapse on economic development?

1.5 Research Hypotheses

The following research hypothesis will be validated in this study:

Ho: The extent the National grid collapse has affected economic development is low

Ha: The extent the National grid collapse has affected economic development is high.

1.6 Scope of the study

Broadly, this study focuses on investigating the problems of National grid collapse in Nigeria and its implication on economic development. Specifically, this study will assess the extent the national grid collapse affects economic development, the causes of the national grid collapse, the effects of the national grid collapse on economic development and proffer solutions in mitigating the extent of national grid collapse 

1.7 Significance of the study

This study will serve as a baseline for researchers and students and also guide government, policy makers. The study will also help in making decisions by the stakeholders concerning power generation.

The study will help to enhance public knowledge regarding the crucial concerns associated with the national power grid and its instances of failure. Heightened consciousness can stimulate the public's desire for responsibility and enhancements in the energy industry. Consequently, this promotes a society that is well-informed and takes proactive measures to support sustainable and efficient energy solutions.

Finally, this study will also serve as a reference material to students and researchers for further studies and future research.

This study will be carried out in Nigeria.

1.8 Limitations of the study

As is customary in all human undertakings, the researchers encountered modest constraints during the investigation. A major limitation of the study is the researcher's financial constraint, as they are a full-time student without any means of income to sustain themselves.

Another limitation was the lack of extensive literature on the subject, as there is limited data available on the problems of National grid collapse in Nigeria and it implication on economic development. Consequently, a significant amount of time and effort was necessary to locate the appropriate resources, books, or information, as well as to gather data. Also, this study is constrained by its small sample size and narrow geographic scope, as it just focuses on Nigeria. Consequently, the results of this study are not applicable for generalization, thereby leaving room for other research.

Furthermore, the researcher faced a time constraint due to the need to do this research while also fulfilling obligations such as attending lectures and other educational activities. 

1.9 Definition of terms

Voltage collapse: Voltage collapse is the partial or complete loss of end users' or customers' access to the electrical power grid

Power outage: an interruption or failure in the supply of power, especially electricity. the period during which power is lost

National grid: The national grid is an interconnecting system that comprises all generation stations, transmission substations, and distribution substations.

Economic development: Economic Development is the creation of wealth from which community benefits are realized. It is more than a jobs program, it’s an investment in growing your economy and enhancing the prosperity and quality of life for all residents.