ENERGY CONSUMPTION AND MANUFACTURINGOUTPUT IN NIGERIA

Abstract

The paper examined the relationship among electricity (ELECT), gas (GAS), coal (COAL), premium motor spirit (PMS) and manufacturing output (MOT) in Nigeria using the annual time series data spanning from 1981 to 2019 by employing the Autoregressive Distributed Lags (ARDL) Model application to cointegration and Error Correction Model techniques. Unit root test was conducted on all the variables of interest in the study. The study finds evidence that electricity and premium motor spirit have a positive, significant and dynamic impact on manufacturing output in Nigeria. Furthermore, gas consumption has positive but not significant effect on manufacturing output in Nigeria. In addition, the study reveals that there is long run relationship among electricity, gas, coal, premium motor spirit and manufacturing output in Nigeria. The finding of this study has implications for energy policy as policy makers and economic planners need to formulate and implement policies aimed at conserving energy use, improving energy efficiency and designing energy demand management. In the same vein, another policy implication with respect to the findings of the study is that, stimulating power generation through gas, which constitutes one of the components of power generation mix in Nigeria will help in addressing a lot of our macroeconomic problems because it will unequivocally enhance and improve the manufacturing sector with much needed electricity supply. The study recommends among others the adoption of energy consumption policies in favour of the variables that significantly impact manufacturing output as this will invariably enable the manufacturing sector access the needed power to improve their capacity and productivity in Nigeria.