Cyclicality is a norm in every market economy. In times of economic recession, increased output is a panacea. In the case of Nigeria, a huge bottleneck to an acceleration in output is the power sector.

Average power output on the grid is approximately 3, 500MW/Hr, less than 10% of aggregate demand (40, 000MW/Hr). This has led to a surge in demand for alternative power and its attendant costs to manufacturers and households.

Investment distortion in the sector has been attributed to imperfect pricing. The minister of power (housing and works) is working on a review of electricity tariffs with a view of making them cost reflective.

This will inevitably lead to a surge in the price of power which many fear will have inflationary consequences. However, if an arithmetic surge in costs is compensated by a geometric increase in output, the consumer is better off in the long run.

The attached bulletin addresses these and other issues in the domestic markets.

Enjoy your read!