THE IMPACT OF ELECTRICAL POWER OUTAGE ON THE OPERATIONAL PERFORMANCE OF SMALL SCALE INDUSTRIES IN ENUGU STATE
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THE IMPACT
OF ELECTRICAL POWER OUTAGE ON THE OPERATIONAL PERFORMANCE OF SMALL SCALE
INDUSTRIES IN ENUGU STATE
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Nigeria is
hugely endowed with energy resources that include oil, natural gas, coal,
biomass, solar, wind and hydro resources among others (Iwayemi, 2008; Onuaha,
2010). However despite this huge endowment Nigeria is also an energy deficient
country whose economy suffers tremendously from the shortage of energy supply
(Iwayemi, 2008). The shortage imposes huge cost on the economy and compels
widespread private provision by different classes of energy users (Lee and
Anas, 1998; Adenikinju, 2005). Additionally Nigerians often spend many
productive hours queuing for petroleum products in the fuelling stations to buy
fuel at government regulated prices because fuel supply scarcity has been a
recurrent feature of the Nigerian energy market. Fuel scarcity in the economy
and failing electricity supply create dual energy crisis for Nigeria (Iwayemi,
2008). Investment in back up generating facility is widespread and imposes
significant costs on the economy. Small Scale businesses suffer the most from
Nigeria’s energy poverty as they spend a large proportion of their capital
(about 20- 25% of their investment) on back up generating facilities (Lee and
Anas, 1991; Foster and Steinbuks, 2008). In fact Iwayemi, (2008) links most of
the country’s economic woes including its inability to industrialize to the
dismal performance of the energy sector. However power supply outages are not
peculiar to developing countries alone considering the recent black outs in
California and other parts of north Western United States of America. Though it
has been the cardinal policy of government electricity policy and consumers
desire to have power supply reliability, keeping the light on is an extremely
difficult challenge (DOE, 2003) especially in a developing economy. Ukpong,
(1973); Iyanda, (1982); Lee and Anas, (1991, 1992); Uchendu, (1993); Ajayi
(1995), Adenikinju, (2005); Oseni and Pollit, (2013) have examined the cost of
power outages and unreliable supply of electricity on firms and document firms
survival strategies in Nigeria and Africa.
1.2 Statement of the Problem
This study
builds on the previous studies by focusing on the small scale businesses in the
North West Nigeria for many reasons. First the small scale businesses have a
lot of contributions to make towards the development of the Nigerian economy in
terms of providing employment and income opportunities for the people. Based on
experience, these types of businesses provide the surest path to
industrialization. Additionally the choice of small scale business is informed
by the fact they are the dominant businesses found in the North West region of
Nigeria but,like other parts of Nigeria, the North West region also suffers
from epileptic supply of electricity and this affects small scale industries a
lot.
1.3 Objectives of the Study
1. To
determine the impact of deficient electricity supply on the operational
performance of small scale businesses in north West Nigeria
2. To
evaluate the true state of power supply in the country.
3. To
ascertain the relationship between electrical power outage and operational
performance of small scale industries.
1.4 Research questions
1. Does
electrical power outage affect the operational performance of small scale
industries?
2. What is
the relationship between electrical power outage and operational performance of
small scale industries.
2. How can
electricity supply be made available to small scale industries in Enugu state?
1.5 Research Hypotheses
Hypothesis
One
Ho: Deficient electricity supply does not
significantly constrain the operational performance of small scale businesses
in northWest Nigeria.
Hi: Deficient electricity supply significantly
constrain the operational performance of small scale businesses in north West
Nigeria.
Hypothesis
Two
H0: There is
no significant relationship between electrical power outage and operational
performance of small scale industries.
H1: There is significant relationship between
electrical power outage and operational performance of small scale industries.
1.6 Significance of the study
The study is
expected to bring to the fore the challenges small scale businesses face due to
unreliable supply of electricity in the region as a way of attracting the
needed policy attention that could go to alleviate their plight. It is also
expected to highlight on the investment potentials for electricity generation,
transmission and distribution infrastructure that the private sector could take
opportunity of in closing the prevailing deficit. This is especially important
considering the recent introduction of electricity market reform in Nigeria.
1.7 Scope/Limitations of the study
This study
covered the impact of electrical power outage on the operational performance of
small scale industries in Enugu state.
Limitations
of study
1. Financial
constraint– Insufficient fund tends to impede the efficiency of the researcher
in sourcing for the relevant materials, literature or information and in the
process of data collection through the internet, questionnaire and interview.
2. Time
constraint– The researcher simultaneously engaged in this study with other
academic work. This consequently cut down on the time devoted for the research
work.
1.8 Definition of terms
Electricity: Is the set of physical phenomena associated
with the presence and flow of electriccharge.
Power
Outage: Is a short or longterm loss of
the electric power to an area.
Operational
Performance: Firm’s performance measured against standard or prescribed
indicators of effectiveness, efficiency, and environmental responsibility such
as, cycle time, productivity, waste reduction, and regulatory compliance.
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