Continental J.

Sustainable Development 2: 1 - 7, 2011

© Wilolud Journals, 2011 http://www.wiloludjournal.com
` Printed in Nigeria

ENERGY RESOURCES’ PRICING POLICY AND ITS IMPLICATIONS ON FORESTRY AND

ENVIRONMENTAL POLICY IMPLEMENTATION IN NIGERIA.

Famuyide O.O.1 S.E. Anamayi2 and Usman J.M.3

Savanna Forestry Research Station, Forestry research Institute of Nigeria, Federal College of Forestry, P.M.B.
5087, Ibadan, Nigeria.

ABSTRACT
This paper looked at the repercussion that often arise in energy resources’ pricing policy in Nigeria as it
affects policy implementation in the forestry sector in particular and the environment in general. There
is a heavy dependence of a large percentage of the Nigeria population on fuelwood and charcoal.
Increase consumption of energy is often accompanied by deleterious effects on the environment. About
80% of the Nigeria population use fuelwood for the supply of domestic energy. Due to the reduction
and removal of subsides in various proportions, in a bid to make the petroleum down stream sector
more efficient, prices of energy resources have been on the increase. Between 1991 and 2007, prices of
energy resource have risen up by 2,416%; 7,140% and 13,252% for electricity, kerosene and cooking
gas respectively. This has translated into increasing deforestation of primary forests which is put at
55.7% between 2000 and 2005; and annual forest area change of -410,000ha between 1990-2000 and
2000 -2005, representing -2.7% and-3.3% respectively. Cutting down of forests for fuelwood is one of
the reasons for deforestation, which has gone a long way to negate efforts aimed at environmental
conservation. It is concluded that any governmental policy that touches the forest estate, impacts on
forestry and environmental policy implementation. It is therefore recommended that more stakeholders
be involved in the decision making process on price changes in the oil sector; federal government
should bear some levels of subsidies on energy resources utilization, policy formulation and
implementation. The policies should be holistically handled so as not to create more problems in
attempt to solve others.

KEYWORDS: Resource pricing, deforestation, forest area change, policy contradictions and policy
implementation.

INTRODUCTION.
Energy consumption levels and economic output are highly correlated. The pattern of energy use is a function
of its availability and affordability. Developing nations derive more than one quarter of their energy from
traditional fuels such as wood, charcoal, animal dung and crop waste (Famuyide, 1995). FAO (1985) estimated
that more than 66% of the people in the developing countries depend mainly on wood for their household
energy.

Nigeria is one of the ten countries that account for 60% of the world population (Sutton, 1996) and has a
population of 140 million (NPC, 2007). Continued increases in National and Global population must result in
ever-greater demand for and exploitation of the earth’s resources. In Nigeria, energy, either for industrial or
domestic purposes, could be obtained from either renewable resources such as hydro, wind, direct solar or wood
resources or non-renewable resources such as fossil fuel or nuclear resources. FAO (2005) reported that Nigeria
has the world΄s impact highest deforestation rate of primary forests and that the country lost 55.7 percent of its
primary forest between 2000 and 2005. Ayodele (1978) and the World Bank (1978) observed that about 70% of
the Nigeria population live in the rural areas and most of this population depend on the forest for their daily
domestic energy needs. The heavy dependence of a large percentage of the Nigeria population on fuel wood
and or charcoal (Agarwal, 1985, Famuyide, 1995) either for household chores or commerce forms the linkage
among energy consumption, forestry and the environment. In discussing the consumption of wood fuels, it is
very important not to limit it to the rural areas alone as the impact of rising energy prices is being felt by both
rural and urban poor dwellers that have resulted to the use of wood fuels for the provision of domestic energy.
Incessant increases in the prices of petroleum products, especially cooking gas and kerosene have not helped the
situation. The increases have resulted in increased demand and consumption of wood fuel as a source of energy.
This is often accompanied by deleterious effects on the environment especially in the irrational exploitation of
the forests and the effusion of carbon oxides to the atmosphere (Famuyide et al 2000 and lbimilua (2005).

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Otegbeye (2000) and price(2002) had observed that exhaustive clearing of woody cover, bad land use practices
including poor cropping methods and heavy pressure from an increasing human population have all contributed
to the aridity and desertification of the Sudano – Sahelian region of the West a African sub-region.

The objectives this paper is:

1) to highlight the effects of energy pricing on forestry and environment degradation 2) to highlight the
implications of the increase in prices of domestic energy resources without due involvement of experts in
forestry and 3) to make policy recommendations based on the findings of this study.

MATERIALS AND METHODS

Data were collected from secondary sources which cover a period of sixteen years (1991 – 2007). The data
collected covers the price variation between 1991 and 2007. The prices used were of time series since the study
is not a trend study. Also the current rate of deforestation was used. Simple descriptive statistics such as tables,
average and percentages were employed in analyzing the data collected.

FINDINGS OF THE STUDY.

Forestry and Environment policy in Nigeria
The forest policy is a federal government act which gives the necessary direction on the development,
management and utilization of the Nigeria forest resources. In considering the 1988 forest policy (FMAWRRD,
1988) and the earlier ones, the country vested the control as well as management of Nigeria forest resources in
the purview of the state governments and this implies that the management of Nigerian forest resources is public
in nature (Famuyide,2002). The 12th objectives of the 1999 national forest policy sought to promote the
utilization of fuel wood substitutes as a way of enhancing the main policy objectives of having 25% of the total
Nigeria land mass under forests though this has remained unachievable. Can we continue to deforest our land?
Since 80% of the Nigeria population used fuelwood for the supply of energy, the usefulness of fuelwood can
never be in doubt but the problem will be that of how to meet the ever increasing demand for fuelwood by an
increasing population.

Energy Resources pricing in Nigeria.

The predominant energy resources for domestic and commercial uses in Nigeria are fuelwood, charcoal,
kerosene, cooking gas and electricity (Famuyide, 1995). Other sources though less common, are sawdust,
agricultural crop residues of corn stalk, cassava sticks and in extreme cases, cow dung (Famuyide at al (2004).
In Nigeria, kerosene and gas are the major cooking fuels. The majority of the people rely on kerosene stoves for
domestic cooking while only a few use gas and electric cookers.(Abiodun, 2003).

The sale of fuelwood and charcoal is mostly controlled in the un-organized private sector. The sale of
kerosene, electricity and cooking gas is essentially influenced and controlled by the Federal Government or her
agencies – NNPC in the case of kerosene and cooking gas and the National Power Holding Company for
electricity. The policy of the Federal Government had been to subsidise the pricing of locally consumed
petroleum products, electricity inclusive. In a bid to make the petroleum downstream sector more efficient and
in an attempt to stem petroleum product consumption as policy focus, the government on a number of occasions,
reduced and removed subsidies on various energy resources in Nigeria. The various policy options have always
engendered price increases of the products.

Table 1: Price Variation of Three Resources in Nigeria 1991 and 2007.

Products/ Kerosene (P/Ltr.) Cooking gas Electricity

year (Per 12.5Kg bottle) (per kw/hr
1991 0.84 26.41 0.24
2007 60.00 3,500.00 5.80
%Increases 7142.86 13252.56 2416.67
Source : Field Data 2007

Table 1 shows price changes of 2,416%, 7,140% and 13,252% for electricity, kerosene and cooking gas
respectively between 1991 and 2007. The implications of all these is that the rural dwellers, the urban and even
the medium income group people would resort almost fully to the use of fuelwood. This would translate into
increased deforestation to source for fuelwood and charcoal which are derived from the forests and are close

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substitutes to kerosene, cooking gas and electricity as domestic energy resources. Environment Rights Agency
observed that massive deforestation of the nation’s severely depleted forest may follow if the fuel price of
kerosene and cooking gas in the face of unchanged income of consumers, leads to a reduction in real income
and decreased demands for these commodities. This is in line with Handerson and Quandt,(1980), that price
increases for normal goods and services without a commensurate increase in the incomes of the people
ultimately leads to decrease in the real incomes hence a decrease in the demand for such goods and services.
This would lead to massive deforestation, biodiversity and habitat loss, including siltation of streams due to land
cover clearing. A scenario captured in Figure 1 would ensue.

Table 2: Price and Quantity Variations in Household Domestic Energy Resources Consumption in Ibadan
Metropolis.

Year Kerosene Cooking Gas Charcoal

Price N/liter Price N /12.5KG cylinder Price N /jute bag
1999 17.00 1,400.00 210.00
2000 17.00 1,400.00 300.00
2001 24.00 1,800.00 350.00
2002 24.00 2,000.00 400.00
2003 32.00 2,300.00 400.00
2004 48.00 2,600.00 600.00
Field survey, 2005.

Table 2 shows the variations in the prices of kerosene, cooking gas and the price of charcoal as domestic energy
resources in lbadan metropolis. From the table, as the prices of kerosene and gas increase, the price of charcoal
also increases.

Table 3: Percentage Change in Price of Household Domestic Energy Resources Consumption in lbadan
Metropolis.
Year Kerosene Cooking Gas Charcoal
Price N/ % change in Price N/12.5kg %change in price Price N/jute bag % change
Liter price cylinder in
Price
1999 17.00 - 1,400.00 - 210.00 -
2000 17.00 0.00 1,400.00 0.0 300.00 42.9
2001 24.00 41.2 1,800.00 28.6 350.00 16.7
2002 24.00 0.00 2,000.00 11.1 400.00 14.3
2003 32.00 33.3 2,300.00 15.0 400.00 0.0
2004 48.00 50.0 2,600.00 13.0 600.00 33.3
Field survey, 2005.

Table 3 shows variations in the prices and the percentage changes in the prices of domestic energy resources.
The fluctuations in the percentage changes in the price of kerosene is attributable to lack of a standard rule in
price increases and also to the realization of the crucial role of kerosene as a domestic energy resources
especially to the middle, low income classes and rural poor of the society. The same thing applies to the price of
cooking gas though mainly used by the elites and high income group of the society. The fluctuation in the
percentage change in the price of charcoal is a function of the demand which normally arises from increase in
the prices of kerosene, cooking gas and electricity.

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Table 4: Percentage change in Quantity of Household Domestic Energy Resources Purchased in lbadan
Metropolis.
Cooking
Kerosene % change %change in Charcoal
Gas % change in bag
Year Quantity in liter cylinder Quantity
Quantity quantity
in quantity quantity in jute
in 12.5kg
1999 25.0 - 50.0 - 6 -
2000 22.4 10.4 50.0 0.0 11 83.3
2001 15.0 33.0 25.0 50.0 18 63.6
2002 12.5 16.7 12.5 50.0 20 11.1
2003 8.0 36.0 10.0 20.0 25 25.0
2004 5.0 37.5 5.0 50.0 30 20.0

Field survey, 2005.

Table 4 shows the in the quantities purchased of the domestic energy resources. As in the case of price
variations as their percentages, quantities demanded of the various domestic energy resources fluctuated and a
response to the price variations of the domestic energy resources.
Fig 2 Percentage change in the prices of kerosene; cooking gas and charcoal fluctuating over the period under
consideration. The movement of the price of kerosene was most unstable. This could be attributed to the fact
that more people make use of this as source of household energy. Less income earners use kerosene than
cooking gas. Cooking gas price movement was the most stable. This might be due to the fact that high income
earners make use of cooking gas, hence could afford to purchase the product despite the hike in price and
probably due to relative stability in the population of those who use gas.

Fig 2 percentage change in price of household domestic energy resources consumption in lbadan metropolis.

Table 5: Forest Area ( ‘000 ha) Change in West Africa between 1990 – 2005.
Country Total forest Annual forest Annual % Annual forest Annual %
Area in 1990 change rate forest change change rate 200- forest change
(1000ha) 1990-2000 rate 1990-2000 2005 (1000ha) rate 2000-2005
(1000ha)
Benin 2,351 -65 -2.1 -65 -2.5
Burkina 6,794 -24 -0.3 -24 -0.3
Faso
Cape 84 2 3.6 0 0.4
Verde
Cote 10,405 11 0.1 15 0.1
D’Voire
Gambia 471 2 0.4 2 0.4
Ghana 5,517 -135 -2.0 -115 -2.0
Guinea 6,724 -50 -0.7 -36 -0.5
Guinea 2,072 -10 -0.4 -10 -0.5
Bissau

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 Table 5 Cont...

Liberia 3,154 -60 -1.6 -60 -1.8

Mali 12,572 -100 -0.7 -100 -0.8
Niger 1,266 -62 -3.7 -12 -1.0
Nigeria* 11,089 -410 -2.7 -410 -3.3
Senegal 8,673 -45 -0.5 -45 -3.5
Sierra 2,754 -19 -0.7 -19 -0.7
Leone
Togo 386 -20 -3.4 -20 -4.5
Total 74,312 -985 -1.17 -899 -1.17
West
Africa
Total 635,412 -4375 -0.64 -4040 -0.62
Africa
Source : Adopted from FAO, Global Forest Resources Assessment, 2005.

Table 5 shows that the total forested area in the 15 countries of West Africa in 1990 was 74,312,000ha and
indicated that Nigeria recorded the most alarming rate of annual forest area change of – 410,000ha.

From the three Tables (3,4 and 5), variations in the prices and quantities of domestic energy resources show that
as the prices of kerosene and cooking gas rose, there were decreases in their quantities bought. While for
charcoal, (a product of the forest), though the price was rising, the quantities purchased were increasing
indicating that charcoal is an abnormal good. It is important also to note that this scenario had been on since the
late 1980s. This has led to persistent decline in aggregate domestic energy consumption sourced from
petroleum and electricity and steady rise in the consumption of fuelwood and charcoal. For instance CBN
(2005) reported decline domestic consumption of kerosene was 25.8%, Cooking gas was 8.1% while electricity
decline by 3.4% . When all these falls in the consumption of domestic energy resources are put together and
considered along side with the ever increase human population of the country, it become obvious that the
decline in their consumption (kerosene, cooking gas and electricity) would have translated into a shift to their
alternative which is either charcoal or fuelwood that are products from the forest. This therefore puts more
pressure on the forests to meet the increasing demand for fuelwood and charcoal. This goes to a large extent to
impact on forestry and environment policies implementation in Nigeria. It is imperative that people must meet
their physiological, food and warmth requirements and as the prices of kerosene, cooking gas and electricity
increase, there is a continuous shift to the use of charcoal and fuelwood as alternatives. This is in line with the
position of ERA as cited in Abiodun (2003) that increases in the price of kerosene have forced rural dwellers
and the urban poor to abandon their kerosene stoves in favor of the comparatively cheaper fuelwood, which is
seen as a substitute source of energy. Kerosene has become a luxury item and only few Nigerians can afford to
use it now for cooking. The bulk of the people are turning to fuelwood which is the major element that will
suffer from this is the forest. F.A.O, (2005), reported that between 2000 and 2005, Nigeria lost 55.7 per cent of
its primary forests. This earned the country the World,s highest deforestation rate of primary forests. Logging ,
subsistence agriculture, and the collection of fuelwood are cited as the leading causes of forest clearing in the
country. This therefore contributes in no small measure to the alarming rate of forest change of Nigeria as
shown in table 5 where annual forest change rate between 1990-2005 was put at 410,000ha representing -2.7%
and -3.3% for years 1990-2000 and 2000-2005 respectively.

Figure 1 represents the ensuring scenario which increased/ high energy resources pricing have been producing in
the country. Decreases in the real incomes of people is a sure way for poverty elevation and lbimilua (2005)
observed that there is a significant positive correlation between poverty and environment degradations

Furthermore, result of the increases in the prices of domestic energy resources is that felling of trees tends to
become rampant as the fuelwood business thrives any time there is a sharp increase in demand fueled by the
high cost of the domestic energy resources. According to FAO as reported by Abiodun (2003), only five
percent of Nigeria’s prime forest is left. Faced with the spate of uncontrolled and outright illegal logging of our
forest, it has often been estimated that our forest resource would be almost totally exhausted in the next 10
years. Nigeria’s original natural forest cover used to span over 600,000 square kilometers (231,660 square
miles) at the beginning of the 20th century. Acute deforestation driven by uncontrolled demand for wood,
mostly for fuelwood and also for export, has within a century reduced the country’s forest cover to less than
38,620 square kilometers (14,910 square miles), less than five percent of its original size.

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The loss in terms of destruction of biodiversity is probably worse. Currently, more than 484 plant species in the
country are believed to be threatened with extinction while deforestation has also decimated several species of
the country’s wildlife.

Nigeria’s wildlife is rapidly declining due to habitat loss and increased pressure from hunters, poachers and bush
burning, as in the report of Vision 2010 and Abiodun (2003). Animals that have disappeared from Nigeria
include the cheetah, the pygmy hippopotamus, the giraffe, the black rhinoceros and the giant eland. About 10 to
12 species of primates including the white-throated guenon species of primates and sclater’s guenon are under
threat due to habitat loss and deforestation.

The forest estate constitutes a major component of the environment and any action that hampers the forest,
therefore, impacts on the forest policy implementation hence the environment as presented by figure 3. Energy
resources and price increments policies are major offenders here.

CONCLUSION AND RECOMMENDATION.

This, paper has shown that, most often, energy resources, price increase policies impacts negatively on the
Nigeria Forest estate and therefore constitutes a major hindrance to a successful implementation of the forest
policy in Nigeria. Should this continue? The answer is obvious NO. The following suggestions are made to
assuage the situation.

1. More stake holders, including environmentalists and forest experts, be involved in the decision making process
on price changes in the oil sector and vice versa.

2. Total elimination of subsidies on the hydrocarbon fuelwood substitutes will have an adverse effect on the
present limited forest resources of Nigeria and her environment. The federal government will promote the
safety of the environment and that of forestry by bearing some levels of subsidies on these energy resources.

3. Policy formulation and implementation, no matter which sector, need to be holistically handled as solving a
problem in one sector almost always engenders creating one or more problems for another sector.

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Received for Publication: 05/02/2011

Accepted for Publication: 14/03/2011

Corresponding Author: Usman J.M. Federal College of Forestry, P.M.B. 5087, Ibadan, Nigeria.
usmanj05@yahoo.com

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