Measuring the Forecasting Power of ARIMA Modeling for Electricity Demand: The Nigeria case

1. Measuring the Forecasting Power of ARIMA Modeling for Electricity Demand: The Nigeria case JamaladeenAbubakar Department of mathematics and statistics HussaainiAdamu Federal polytechnic, kazaure 08034067081, 07053555571 ajafuntua@yahoo.com NafiuBashirAbdussalam Department of Economics Bayero University, Kano 07037880962 Nafiu_bashir@yahoo.com

2. OVERVIEW OF THE WORK • Introduction • Literature Review • Methodology • Sources of Data • Econometric tools • Result Presentation and Analysis

3. Introduction • The Role of electricity in the global economy • The role of electricity in Nigeria • Electricity Demand • Residential Sector • Commercial sector • Street light and • Industrial Sector • The rule of thumb for electricity consumption is 1 gigawatt (1000 megawatt) for every one million population (RMFR, 2010)

4. Introduction • Demand and supply gap of eletricity: the global exprience

5. Introduction Cont..... • Demand and supply gap of eletricity: the Nigerian exprience

6. Introduction cont…… • The Government efforts to address the demand- Supply Gap in Nigeria • Fulfilling the imperative of the electric power sector act reform • Improving service delevary the transition by Fuel to power Generation Transimition Distribution Human Capital Development and Energy consumption effeciency iii) Removing obstacles to private sector investment through • Establishment of appropiate price regime • The estaablishment of a bulk purcher

7. Introduction Cont.... • Nature of electricity market in Nigeria • Does incentives existance in the Nigeria Electricity sector?

8. Literature Review • Empirical evidence from developed countries, for instance, Halicioglu (2007) for Turkey; Zachariadis and Pashourtidou (2007) for Cyprus; Narayan and Smyth (2006) for Australia; Galindo (2007) for Mexico; Holtedahl and Joutz (2004) for Taiwan; Filippini and Pachauri (2004) for India; Hunt et al. (2003) for the United Kingdom; Sa’ad (2009) for South Korea; Donatos and Mergos (1991) for Greece

9. Literature Review • Evidence from developing countries De Vita et al. (2006) for Namibia; Ziramba (2008) for South Africa; Babatunde and Shuaibu (2009), Ayodele A.() and Adams et-al (2011) for Nigeria • However, an aggregated analysis that incorporates other uses of electricity such the industrial and commercial sectors to obtain robust estimates of electricity demand parameters for policy decision-making is considered pertinent with this paper filling the vacuum.

10. Methodology • Sources of Data • Econometric Model Specification • The traditional enonomics/economiteric anlysis and its modeling procedure • Modern econometrics/time series analysis Box-Jenkis Methodology The basic ARIMA (1 1 1) Model

11. Methodology cont………..

12. Descriptive Statistics Result

13. Result for statinarity Test

14. Empirical Result • Diagnostic Checks

15. Empirical Result cont…… • Evaluation of the forecasting power of the models

16. Empirical Result Cont…… • Result For Serial Correlation Test

17. Conclusion and Recommedation • Government should consider alternative models for forecasting both demand and supply of electricityin Nigeria • In order to reach the minimum standard for electricity supply, huge amount of money need to be Investment on electricity sector of Nigeria • The sources of electricity in Nigeria should be diversified as it exist the hydro-electric as the main sources of electricity in Nigeria