Journal of Economics and Sustainable Development www.iiste.org ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.4, No.14, 2013 122 National Electric Energy Supply and Industrial Productivity in Nigeria from 1970 to 2010 Nwajinka, Chibundu Chiazoka 1 Akekere, Jonah 2 Yousuo, Purumaziba Odokpon John 3 1. Economics Dept, University of Nigeria, Nsukka 2. Economics Dept. Niger Delta University, Bayelsa State 3. Economics & Development Studies, Federal University Otuoke, Bayelsa State. *E-mail of the corresponding Author: purumazibajohn@gmail.com Abstract This study investigates the impact of electric energy supply on the industrial sector productivity in Nigeria from 1970 to 2010. The specific objectives were; to investigate the extent to which electricity supply impacts on industrial development in Nigeria and examine the existence of a long run relationship between electricity supply and industrial productivity in Nigeria. We obtained secondary data from the CBN Statistical Bulletin, using the multiple regression analysis. The result shows that national energy supply have no significant impact on industrial productivity in Nigeria, the ADF test results shows that all the variables are stationary at first difference and that the convergence of industrial output to equilibrium in Nigeria which is below zero (-.9450) equilibrium line points to the possibility of convergence of industrial output at the nearest future. We therefore recommend sustained sanitization and funding of the power sector and the encouragement of private partnership in the power sector, which we believe will enhance the growth of the economy. Keywords: industrial output, energy consumption and supply, manufacturing output, price level, co-integration and economic growth. 1. Introduction Industrialization has been a key determinant that fosters high growth indices in emerging economies of the world including China, Indonesia and Taiwan (Nazima, 2011). These economies have achieved high growth rates due to high industrial development, which further caused declining poverty trends and high growth statistics (knivilla,2005).Development of industrial sectors brings substantial changes in the real sector of the economy and also leads to rise in the national income of the country which in the long-run brings about creation of employment. This sector has attracted special attention several decades ago as it has the potential for improvements in the balance of payment, production of exportable goods and import substitution. Technology is considered as a prime factor in this regard. Industrial development and technological development are interdependent and interrelated. While technological development a prerequisite for industrial development, the industrial sector is the major propelling force for technological development and innovation (Ernst et al, 1994).However in any developing economy like Nigeria, neither can each flourish unless there is adequate technological infrastructure put in place (SutCliffe, 1971, Hodder 1973, Offiong 2001). Regular and affordable power supply is a catalyst for socio-political, economic development and its sustainability in any society. Hardly, can any enterprise or aspect of human development function productively without electricity or other forms of energy supply. Nigeria is richly endowed with diverse energy sources; crude oil, natural gas, coal, hydropower, solar energy, fissionable materials for nuclear energy, yet the country consistently suffers from energy shortages, a major impediment to industrial and technological growth. Such indicators as blackouts and persistence reliance on self-generating plants, is a painter to low productivity and underutilization of resources (Udah, 2010). Indeed, as noted by Ekpo (2009), Nigeria is running a generator economy with its adverse effects on cost of production. For over two decades Nigeria has experienced structural challenges in the area of electricity generation, transmission and distribution. The extent of this is underlined by the fact that Nigeria is the largest purchaser of standby electricity generating plants in the world (Braimoh & Okedeyi 2010). Between 1981 and 1985, during the Fourth National Development Plan the oil boom increased power demand growth rate by over 10 Percent. The rapid growth rate makes it difficult for the installed capacity to cope with the requirement of both residential and industrial consumers. President Obasanjo led government focused on economic reform strategy with a view to ensuring overhaul of the power sector (Asubiojo, 2007). To this end the regime set up a committee to review the National Electric Power Policy, which recommendations were not implemented. On August 26, 2010 President Goodluck Jonathan launched the Roadmap for the Power Sector Reform to fast-track the implementation of the Electric Power Sector Reform (EPSR) Act. The President in his speech identifies the factors affecting reliable electricity service delivery to include the absence of a sustained and deliberately deployed long term power development strategy, under-exploitation of the nation’s abundant energy endowments and the absence of adequate implementation of reforms. The low and unstable capacity utilization shows the large gap between installed and actual operational capacity. This gap indicates the level of technical inefficiency in the power sector which weakened the industrialization process, resulting to low productivity and high operational cost, significantly undermined the efforts of the Nigerian government in sustaining its economic performance. We all expect and still expecting government to do more on the state of electricity crisis as a primary factor that enhance industrialization in an economy. Moreso, of all the literature reviewed on energy supply and industrial productivity in Nigeria, the long-run relationship, existing between electricity supply and output growth in Nigeria has not been adequately addressed. It is based on this premise that we decided to carry out this study; to examine the impact of national electric energy supply on industrial productivity and see if there will be a long run relationship between energy and industrial output in the nearest future.