ABSTRACT
The study analyzed the determinants of market access to LPG use among urban households in Abia State, Nigeria. The objectives is to: Measure the effect of income on market access of LPG, evaluate the impact of price to availability to market access of LPG, determine the influences of product availability of LPG and identify the preference pattern of selected cooking energy sources outside LPG. The study was done in the urban areas of Abia State. In this case, two urban areas of Aba and Umuahia were chosen, after which 120 households were selected from each these areas, making a total of 240 households. Objectives were analyzed using descriptive statistics and probit regression model. The results showed that income, price and availability were all significant in accessing the LPG products. Major constraints to access were cost of starting and explosion. It was also observed that kerosene was the major preferred cooking energy in urban area. The study recommends that price of LPG should be made affordable and product highly available. Also safety and public sensitization campaigns should be organized to educate the households on the use of LPG.
TABLE OF CONTENT
Title
page i
Declaration
ii
Certification iii
Dedication iv
Acknowledgement v
Table
of Content vi
List
of Tables x
List
of Figures xi
Abstract xii
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background
of the Study 1
1.2 Statement
of Problem 6
1.3 Objective
of the Study 8
1.4
Research
Question 9
1.5 Research
Hypothesis 9
1.6
Significance of the Study 10
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1
Emergence of Nigeria’s Natural Gas Industry 11
2.2
The Exploration and Production of Natural Gas in Nigeria 14
2.3 Theoretical Framework 23
2.3.1
Gas Flaring and Environmental Pollution 25
2.4 Fuel Substitution and the Energy Ladder model 31
2.5 A critique of the Energy Ladder Model 38
2.6 The Energy Mix Model 43
2.7
Formal Presentation of the Energy Mix Model 50
CHAPTER THREE
METHODOLOGY
3.0 Introduction 56
3.1
Research Design 56
3.2 Area of the Study 56
3.3 Population for the Study 57
3.4 Sample Size Determination 57
3.5 Sampling Technique and Method 58
3.6 Sources of Data 58
3.7
Validity and Reliability of Instruments 58
3.8
Data Analysis 59
3.9
Model Specification 59
CHAPTER FOUR
4.0 RESULT AND DISCUSSION
4.1 Socio-Economic
Characteristics of the Respondents 62
4.1.1 Household
size distribution of the Respondents 63
4.1.2 Educational
attainment of household heads 64
4.1.3 Marital
status of the Respondents 65
4.1.4 Income
distribution of the respondents 65
4.2 Problems
Associated with the use of LPG 67
4.3 Preference
pattern of selected cooking energy sources outside LPG 68
4.4
Determinants of Access to
Liquefied Petroleum Gas (LPG) among Household
in Abia State 69
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATION
5.1
Summary 72
5.2
Conclusion and Recommendation 73
References 75
LIST OF TABLES
Table
2.1 Gas Produced and flared, 1959-1994 17
Table
2.2: Value of gas produced, utilized and flared (N billion),
1961-1998
18
Table
4.1 Age distribution of the respondents 62
Table
4.2 Household size distribution of the Respondents 63
Table
4.3: Education of Respondents 64
Table
4.4 Marital Status of the respondents 65
Table
4.5 Income distribution of the household head (respondents) 65
Table
4.6: Problems Associated with the use of LPG in the study area 67
Table 4.7: Preference pattern in the use
of selected cooking energy sources
outside LPG in order of preference 68
Table 4.8: Estimates of the determinants of
market access to LPG by households 69
LIST OF FIGURES
Figure 2.1:
Schematic illustration of the Energy Ladder Hypothesis:
Change in Fuel with Increasing Income
Level 33
Figure 2.2:
Schematic Representation of the Energy Ladder Hypothesis 34
Figure 2.3
Conceptual Framework of the Energy Mix Model 47
Figure 2.4
Schematic Representation of the Energy Mix Model in terms of Expenditures 50
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the
Study
Issues
bordering on climate change and variability, mitigation and adaptation measures
have be cone topical and occupy the centre stage of many scientific studies and
discussions (Mbanasor et al., 2010; Agwu et al., 2012). Although impact of
climate change is global, but its severity is huge and appeared to have made its
nest in Africa’s social and economic development because of poor adaptation
capacities and measures by government and individual (Nwafor, 2007; Jagtap,
2007); especially those that concerns attitude aimed at creating a sustainable
environment by reducing greenhouse gas emission such as carbon emissions from the
consumption of energy.
Over
the years, many efforts of government and agencies have been directed at
preventive measures rather than reactionary measures. Thus was seen as the
basis for N21.6 billion flood fund by Nigerian government to reduce the impact
of 2012 flood. Although this measures may have reduced the severity of the
flood on agricultural GDP, however, according to Okonjo Iweala (2014), these
are scare financial resources that could have been deployed to much needed
public services like health, education and other key sectors, if there were
measures taken to mitigate the occurrence of such huge environmental threat. In
mitigating threats of climate change, what is important as a response mechanism
is solid knowledge, in terms of causes. Beyond that is to obtain commitment
from the people to ensure compliance. Theoretical and empirical evidence
suggest that carbon pollution is the biggest causes of climate change. Carbon
dioxide (CO2) emissions are caused by human activities. One of the
main human activities that emit huge volume of CO2 in Nigeria
besides gas flaring is emission from household cooking energy.
Nigeria
as a large developing country has a considerably high energy requirement for
cooking. Cooking energy choices include liquefied petroleum gas (LPG),
kerosene, electricity, charcoal, firewood or fuel-wood and other solid fuels.
According to International Energy Agency (IEA) (2002), approximately 2.4
billion people in developing countries rely primarily on traditional biomass
fuel for cooking and heating needs. Although Nigeria is the largest oil
producing country in Africa with large natural gas reserve and renewable energy
resources, more than 117.8 million Nigerians rely on wood and biomass for
cooking. These biomass fuels include wood, charcoal, low dung and crop
residues. In Nigeria, fuel-wood and charcoal has specially been known to be the
major sources of energy for cooking and heating needs purposes for people in
the rural area, while kerosene are mostly used in the urban areas. According to
Ebe (2206) and Chukwu (2000), more than 70 percent of the total population in
Nigeria relies on fuel wood or charcoal. The preferences for biomass fuel and
kerosene among mostly poor people and developing countries is seen as a viable
alternative to high cost options in other
modern energy used by household. However, new studies have found that black
carbon, which is mostly “soot”, formed in the combustion of wood and fuel such
as diesel and kerosene is the second
most important contributor to global climate change (Aid for Africa, 2013).
Several
other studies have shown that inefficient and
traditional utilization of biomass fuel and kerosene has several implications such as
risk of low birth weight and pulmonary tuberculosis in developing countries,
productivity and the environment (Epstein et al., 2013; Pokhrel et al., 2010;
ESMAP, 2003). According to World Health Organization (WHO) (2002), the risk associated
with air pollution from solid full accounts for 2.7 percent of global losses of
healthy losses of healthy risk. Statistically, about 1.3 million people, mostly
women and children die prematurely every year exposure to indoor air pollution
from biomass. This is a serious global challenge which has continued to receive
global attention in response to demand for sustainable development. As a
measure to reduce the negative of man, scientists, policy makers and researchers have in unionism advocated for
a clean and efficient energy alternative
that is cost effective and available as a one of the resilient strategies. Many
of these strategies are cross cutting and apply to home, businesses, industry
and transportation.
As
a home strategy, liquefied petroleum gas (LPG) is mentioned in the context of
sustainable development (Williams, 2007), because it is a cleaner, low carbon,
gaseous duel. LPG is one of the products of natural gas and usually consists of
mixture of propane (C2H8) and butane (C4H10)
for standard heating and cooking purposes. Its unique properties make it a
versatile energy source. In comparison with other fuels employed for household
cooking around the world, LPG has clear cut benefits in terms o health,
efficiency, availability and climate impact. Perhaps the most compelling
argument against other energy source is either inability to even consider the fact
that threat to climate change is imminent. According to Williams (2007), if
average African household switched to LPG, each family would have saved 120kg
of firewood annually. In addition, it is
estimated that if half of the number of household currently cooking with solid
fuels switched to LPG, it can provide health and productivity gain of more than
USD 900 billion over the next ten years (WHO, 2002).
Fortunately
for Nigeria, she is blessed with a proven gas reserve of more than 187 trillion
cubic feet (NLNG, 2011). This suggests that Nigeria can stabilize carbon emission
through massive development, investment and
utilization of LPG thereby entrenching low carbon economy (LCE).
According to Okonjo-Iweala (2014), the multiplier effect of investment and
savings from the sale of gas and associated LPG
is estimated to yield a net present value of $7.5 billion over the next
25 years, besides the environmental impacts. Despite resources availability and
other empirical benefits, only about 5 percent of Nigeria’s households use of
LPG, with total annual consumption of
paltry 150,000 metric tones. This translate into 0.9kg per capita, compared, to
Senegal annual per capita consumption of 13kg. without doubt, Nigeria is ranked
among the lowest consumers of LPG in Africa. Given her population, Nigeria
could consume more than 3.5 million MT if LPG was its major fuel for cooking
but reliable data shows that Nigeria recorded about 39 percent growth in
domestic consumption of LPG between 2005-2012, indicating a very slow growth
over the years notwithstanding government interventions (NLNG, 2011).
Low
consumption ang growth of LPG market in Nigeria has been attributed to many
factors. The question of availability, affordability, income, government and
international oil policies, other household characteristics such as price has
been noted as some of the factors influencing demand for energy choices among
households such as price (Williams, 2007; ESMAP, 2003; Quedraogo, 2005). It is
evident that LPG market responds to
market changes in international oil prices; from primary law of demand that
increases in international price of LPG affect domestic consumptions as
consumers move down the energy chain towards other energy alternatives.
Houthakkar and Talor (1970) argued that consumers may continue to make
purchases on the basis of habit even if prices have changed. Other hindrances
to the growth of LPG market include subsidization of Kerosene by successive
government in Nigeria, low public awareness, poor infrastructures, and lack of
investment in the gas value chain (Kalejaye, 2014). Like in other markets in
Nigeria, LPG market is constrained by poor market infrastructure and logistics
challenges (Alison-Madueke, 2014). The implication of poor market access is low
energy utilization with adverse effect on economic growth. Therefore, the need
to reverse this trend in order to fully maximize the benefits therein makes the
consideration of this imperative.
1.2 Statement of the
Problem
Environmental
degradation due to deforestation, desertification and the consumption of energy
sources, health hazards due to consumption of biomass fuels and distribution
concerns are emerging issue with the rising demand for cooking energy. These
issues have en secured serious welfare impacts on households. Deforestation and
despoliation of environment has made it even more difficult to secure a clean
and safe environment and mitigate greenhouse effect (CSR Digest, 2004).
Arising
from the problem of deforestation, many policies, campaigns and laws have been
implemented and enacted by the government to decrease felling of trees and its
use households as energy sources. Some of these policies include tree planting,
campaigns and jail sentences to those involved rate of forest resources is
still alarming. In recent years, depletion of resources has resulted in an
increase of direct and indirect costs (FAO, 2003).
Archard
et at (2002) reported that the rate of forest loss in Africa as about half of
the rate in Southeast Asia. In Nigeria about 35.7 percent of forest cover was
lost between 1990 and 2005 (Butter, 2005). Specifically, in the Southeast
Nigeria, it was estimated the forest is decimated at the rate of 3.5 percent
annually; which s higher than the national average of 2.5 percent (Enugu State
Government and DFID, 2003).
Despite
the cleaning burning usefulness, environmental friendliness and other health
related advantages as well as versatility and huge deposits of natural gas from
where LPG is purchased , its use and consumption still remains very low. He
question of availability, affordability/price of the LPG, income,
government policies and other household
characteristics has been noted variously as some of the factors influencing the demand for
energy choices among households (Williams, 2007; ESMAP, 2003; Quedraogo, 2005).
It has been noted that as price of LPG fluctuates to international oil prices,
so as the market change (Williams, 2007). Increase in the international price
of LPG, domestic gas consumption decreases as consumers move down the energy
chain towards other energy sources like coal, fuelwood, kerosene etc; which are
believe to be cheaper.
However,
consumption may continue to make purchases on the basis of habit even of prices
have changed (Houthakkar and Talor, 1970). This according to them is costly for
consumers to remake consumption decisions everyday and this result in delay
responses towards price changes. The strength of this study lies in its
contribution to mitigating the challenges of climate change impact in Nigeria;
the need to expose the extent to which households in their bid to access LPG.
Several studies in time past left these issues outside its purview and
concentrates on energy preference (Quedraogo, 2005); household fuel use and
fuel switching (ESMAP, 2003); LPG pricing situation and analysis of household
energy use and interior air pollution (WHO, 2005).
1.3 Objectives of the
Study
The
board of the Study is to analyze the determinants of access to liquefied
petroleum gas (LPG) among households in Abia State. The general objectives are
to:
i.
Measure the effect of
income on market access of LPG
ii.
Evaluate the impact of
price to market access of LPG
iii.
Determine the influence
of product availability to market access of LPG
iv.
Identify the preference
pattern of selected cooking energy sources outside LPG
1.4 Research Question
I.
How does income affect
market access of LPG
II.
How does price affect
market access of LPG
III.
Does availability affect
access to LPG market
IV.
How does LPG affect
preference pattern of other cooking sources
1.5 Research Hypothesis
The
research hypothesis is stated below:
H01:
Income does not have any significant effect on market access LPG
H02:
Price does not have any significant effect on market access of LPG
H03:
Availability of product is not significant in accessing LPG product
H04:
LPG does not affect the preference pattern of other cooking sources.
1.6 Significance of the
Study
Many
studies in the past in the area of cooking have been based on energy
preferences (Quedraogo, 2005); household fuel use and fuel switching (ESMAP,
2003); LPG pricing , and situation; analysis of household energy use and indoor
pollution (WHO, 2005). The study is different. The result of the study will:
i.
Help expose the extent to
which households have access to LPG.
ii.
Help expose the problems
encountered by households in their bid to access LPG
iii.
Help the government and
other stakeholders in formulating policies geared towards the use of energy
sources by households especially LPG
iv.
Help other researchers
who may want to go into similar area in future.
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