1.1 Background of the Study
1.2 Objectives of the Study
1.3 Justification of Study
1.4 Scope of the Study
2.0 Literature Review
2.1 Theoretical Framework and Methodology
3.0 The Energy Market
4.0 ECOWAS Energy Protocol: Open and Competitive Energy Market
4.1 The Energy Market in West Africa, How Liberal? Nigeria and Ghana as a case study
THE DEVELOPMENT OF OPEN AND COMPETITIVE ENERGY MARKET UNDER THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS) ENERGY PROTOCOL.
BY: ADEDOKUN LUQMAN ADEBAYO
Despite the rhetoric of energy independence, sub-regional trade in energy has long been the desires of nations as a means of achieving energy security in their various states. This interplay is governed by certain rules and regulations that ensures for a free and open market system, amongst the countries that participate in them. This paper seeks to show the emergence and development of an open and competitive energy market under the Economic Community of West African States (ECOWAS) energy protocol. It examines the multi-polarity of the sub regional energy market and its existing legal framework as regards the constraints in providing an open and competitive market.
In the last five years, nearly 30% of the world’s oil and gas discoveries were in Sub-Saharan Africa. Foreign investors investing in developing economies may today face barriers to trade, arising out of uncommon norms and standards, exemptions and arbitrary public procurement policy and decisions in the West African sub-region. In order to overcome such barriers to trade and competition in energy industries, the energy sector was persuaded to adopt continuous and consistent levels of international cooperation on issues of energy trade and competition. The ECOWAS Energy Protocol provides the legal framework for such cooperation. The ECOWAS Energy Protocol was signed in Senegal in 2003 by ECOWAS Member States with the major objective of promoting long term cooperation in the sub-regional energy market, with a view of achieving increased investment and energy trade in the region. The Protocol does not derogate from the provisions of the World Trade Organisation (WTO) Agreement with respects to rights of contracting parties who are members of WTO.
Markets with effective competition are generally characterized by consumer choice, low prices and quality levels desired by consumers. Effective competition thereby directly benefits consumers by increasing consumer surplus through lower prices, and firms by protecting competitors against the abuse of market power by dominant firms. This major economic insight is also the underlying principle for the liberalization of the European and subsequently, the West African energy markets. Fostering competition in the energy market is even more important than in many other sectors of the economy due to the outstanding importance of energy prices and availability of production processes, economic growth and consumer welfare in modern industrialized economies .
To respond to the growing energy security challenges, the energy sector will require an investment of USD 48 billion annually until 2030, according to a recent report by the International Energy Agency (IEA). However, the low level of foreign direct investment (FDI) in transition and emerging economies means that various constraints remain in achieving such a goal. In addition to investor promotion and protection mechanisms, international cooperation should be considered in removing barriers to network energy industries as a way to overcome obstacles to private sector participation in resource development and infrastructure.
The objective of this study is to explain the development of an open and competitive energy market under the economic community of West African States (ECOWAS) Energy Protocol.
The Economic Community of West African States (ECOWAS), with its mission to promote economic integration across the region, is a regional group of fifteen West African countries founded on 28 May 1975, with the signing of the Treaty of Lagos. One of the treaties entered into by ECOWAS member states include inter alia the ECOWAS Energy Protocol which is also aimed at promoting long term cooperation in the energy field with a view of achieving increased investment and energy trade in the region.
This research’s focus/scope of work will be limited to the development of open and competitive energy market under the economic community of West African States (ECOWAS) Energy Protocol.
In the course of this research, several reports by non-governmental organisations, newspaper reports and online search indexes played a major role in this work. Amongst the online sources of information that played a major role in this research is the Economic Community of West African States (ECOWAS), the United Nations Economic Commission for Africa’s website respectively and Ms Ifeyinwa Ikeonu’s presentation on the case for energy infrastructure in ECOWAS.
Economic Community of West African States (ECOWAS) and the United Nations Economic Commission for Africa websites respectively were very useful to this research work particularly as relating to the provision of updated data and information.
The research methodology employed in this research work is the black letter methodology and consists of secondary data which includes articles, publications, and situational reports of non-governmental organisations such as reports by the United States Energy Information Administration.
No questionnaire was designed by the researcher of this work; he only relied mostly on the facts and figures contained in articles, journals, publications and internet materials which served as a means of sourcing for this research work.
A market is usually classified in terms of place, time, conditions of entry/exit and products. For the purpose of this paper, we shall rely on Alfred Marshall’s description of market in his Principles of Economics (first published in 1890) where he stated that “Economists understand by the term Market, not any particular market place in which things are bought and sold, but the whole of any region in which buyers and sellers are in such free intercourse with one another that the prices of the same goods tend to equality easily and quickly.”
Open market describes an economic system with no barriers to free market activity characterized by absence of tariffs, taxes, licensing requirements, subsidies, unionization on any other regulation or practices that interfere with the natural functioning of the free market. There may be competitive barriers to entry, but there are no regulatory barriers to entry.
A competitive market on the other hand is one in which a large number of producers compete with each other to satisfy the wants and needs of a large number of consumers. It depicts a situation where there is no single producer, or group of producers and no single consumer, or group of consumers that dictate how the market operates.
Although there seems to be no clear-cut categorisation of the Energy Market, four basic categorisations can be discerned for the purpose of this research work and they are:
- Renewable Energy Market which includes market for solar energy, thermal energy, geothermal energy and such other renewable forms of energy.
- Non-Renewable Energy Market which includes the market for hydrocarbons i.e. petroleum and coal.
- Electricity Market.
- Nuclear Energy Market.
 PhD Student in the field of Environmental Law and Sustainable Development at the Atlantic International University, Honolulu, Hawai, United States.
 Africa Energy Outlook, retrieved from www.worldenergyoutlook.org/Africa
 Ugur Erman Ogur (2012), Review of ECT Implementation in Selected Areas: Analysis on Issues Relating to Competition under the Energy Charter Treaty. Retrieved from www.energycharter.org/fileadmin/DocumentsMedia/Thematic/Competition_Study_2012_en.pdf. Accessed on the 5th day of October, 2015.
 Delmon Jeffrey, Victoria Rigby Delmon (2011), International Project Finance and PPPs: A Legal Guide to Key Growth Markets, Kluwer Law International. Retrieved from https://books.google.com.ng/books?isbn=9041127194. Accessed on the 5th day of October, 2015.
 Ifeyinwa Ikeonu, The Case for Energy Infrastructure in ECOWAS. Retrieved from www.unctad.org/meetings/en/Presentation/cimem_IKEONU.pdf. accessed on the 5th day of October, 2015.
 Op cit, 3
 Barry L. Bayus and Rajshree (Department of Business Administration, University of Illinois) -2002: The Market Evolution and Sales Take-off of Product Innovations at https://business.illinois.edu/research/020104paper.pdf.
 Found at http://www.britannica.com/topic/market
 Onwumere J.U J et al: Does Open Market Operations as a Monetary Policy Tool have Impact on Price Stability in Nigeria? – Article Published in Research Journal of Finance and Accounting Vol. 3, No. 10, 2012.
 Introduction to Competitive Markets by Jordi Beggs found at http://economics.com/od/perfect-competition.
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