ENERGY CONSUMPTION: CASE OF THE IVORY COAST, SENEGAL AND GHANA

Abstract

The thesis examines the consumption of electricity and gasoline in the Ivory Coast, Ghana and Senegal. Its main objectives are (1) to investigate the determinants of the demand for gasoline and the demand for electricity by households and firms, (2) to forecast the level of electricity and gasoline consumption for the years 1980 to 1985, and (3) to recommend measures to curb the rate of increase in the demand for energy and to reduce the dependence upon imported oil. The choice of the models used in the estimation of the demand for gasoline and the demand for electricity by households and industries were greatly influenced by the fact that energy consumption is associated with that of other complementary durable goods. The models of gasoline demand fitted to annual data for the Ivory Coast were the stock-adjustment model and the Koyck model. The empirical results of the residential demand for electricity are based on the Koyck model, the flow-adjustment model and the new demand model. As to the estimates of the industrial demand for electricity they were obtained with the following models: The Koyck model, the new demand model, a model based on an overtime profit maximization by a firm. The results based on the gasoline demand equations indicate that income is a major determinant of gasoline consumption in Senegal, while in the Ivory Coast, habit formation and or stock adjustment are the determinant factors. As far as price is concerned, it has consistently negative elasticities both across countries and specifications, but is not significant. For the residential demand for electricity, the results are much more encouraging. All of the countries show that price and the social and demographic factors and per-capita income are major predictors of residential electricity consumption. Their relative importance differ, however, both across countries and specification. The lagged dependent variable is significant with the new demand for electricity for Senegal and Ghana, and with the Koyck model for the Ivory Coast. Finally, the results for the industrial demand for electricity indicate that price, capital stock, and wage have an influence on the level of electricity consumed in the Ivory Coast, Senegal and Ghana. In addition to the variables mentioned above, output is also an important predictor of industrial electricity consumption in the Ivory Coast. On the basis of these findings, we recommended the following measures: (1) to increase the price of electricity and gasoline over a reasonably long period so that the relative price of different fuels reflect the change in relative cost of alternative fuel production; (2) to adopt a development strategy based on the implementation of export-oriented industries and the progressive removal of the trade barrier behind which the import-substitution industries have been hiding; and, (3) to reconsider the non-commercial fuel (wood, charcoal) as an alternative source of energy.