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Energy Sector Governance and Cost Reflective Pricing in West Africa

Gershon, Obindah and Ezurum, Alex (2017) Energy Sector Governance and Cost Reflective Pricing in West Africa. In: Presentation at UNECA-AfDB-UNDP hosted 12th African Economic Conference, 4th - 6th December 2017, Addis Ababa, Ethiopia.

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This study was carried out to consider the effectiveness of energy sector governance and electricity pricing in Nigeria – which also has implications for West Africa’s power pool and energy policies in the region. This paper applies the concept of cost reflectivity to analyze the current electricity tariff regime in Nigeria. Multi Year Tariff Order (MYTO) 2015 methodology was applied in the analysis - employing the marginal cost (MC) and marginal revenue concepts (MR). It was noticed that, the cost of providing a unit of electricity (1 kWh) varies by region while the revenue generated from providing the same unit of electricity also varies by region. However, energy sector governance in the main West African electricity market - Nigeria - is very weak. While, a competitive market structure is gradually emerging, debts accrue along the value chain with every unit of power consumed. More so, the underlying assumptions of the methodology have been consistently violated and as such tariffs have not been completely cost-reflective. Some underlying assumptions of the MYTO methodology need to be reviewed for it to sufficiently de-risk energy investments in Nigerian Electricity Supply Industry (NESI) especially against macroeconomic shocks.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: MYTO, NESI, Investment, GenCos, TCN, DisCos, Nigeria
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Patricia Nwokealisi
Date Deposited: 22 Jan 2018 12:51
Last Modified: 22 Jan 2018 12:51

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