The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approach
In sub-Saharan African countries, firms are suffering from frequent, long-lasting and random power outage, which makes planning and production activities difficult. Thus, understanding a firm’s cost associated with unreliable power supply is crucial for policymakers and potential investors in the en...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2024-12-01
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| Series: | Journal of Applied Economics |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/15140326.2024.2394715 |
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| author | Birku Reta Entele Shibiru Ayalew |
| author_facet | Birku Reta Entele Shibiru Ayalew |
| author_sort | Birku Reta Entele |
| collection | DOAJ |
| description | In sub-Saharan African countries, firms are suffering from frequent, long-lasting and random power outage, which makes planning and production activities difficult. Thus, understanding a firm’s cost associated with unreliable power supply is crucial for policymakers and potential investors in the energy sector. To this end, we estimated the economic cost of power interruption to manufacturing firms in selected cities of Oromia Regional State in Ethiopia using a mixed logit model. We collected data from a sample of 600 manufacturing firms. The result shows that a firm’s average cost of power interruption is equivalent to ETB 51,777 (~US$976) per month, which corresponds to a nine-fold of their current monthly electricity bill. In addition, the interruption costs amount to 2.22% of a firm’s gross monthly revenue. Moreover, we observed a considerable variation in our results, which be partly attributed to company size and type of industry where a company belongs to. |
| format | Article |
| id | doaj-art-2c04e8eeb30b47cc90a8ca34bb6f98ca |
| institution | Kabale University |
| issn | 1514-0326 1667-6726 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Journal of Applied Economics |
| spelling | doaj-art-2c04e8eeb30b47cc90a8ca34bb6f98ca2024-11-22T09:09:02ZengTaylor & Francis GroupJournal of Applied Economics1514-03261667-67262024-12-0127110.1080/15140326.2024.2394715The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approachBirku Reta Entele0Shibiru Ayalew1Department of Technology and Innovation Management, Adama Science and Technology University, Adama, EthiopiaDepartment of Technology and Innovation Management, Adama Science and Technology University, Adama, EthiopiaIn sub-Saharan African countries, firms are suffering from frequent, long-lasting and random power outage, which makes planning and production activities difficult. Thus, understanding a firm’s cost associated with unreliable power supply is crucial for policymakers and potential investors in the energy sector. To this end, we estimated the economic cost of power interruption to manufacturing firms in selected cities of Oromia Regional State in Ethiopia using a mixed logit model. We collected data from a sample of 600 manufacturing firms. The result shows that a firm’s average cost of power interruption is equivalent to ETB 51,777 (~US$976) per month, which corresponds to a nine-fold of their current monthly electricity bill. In addition, the interruption costs amount to 2.22% of a firm’s gross monthly revenue. Moreover, we observed a considerable variation in our results, which be partly attributed to company size and type of industry where a company belongs to.https://www.tandfonline.com/doi/10.1080/15140326.2024.2394715Economic costpower interruptionmanufacturing firmsEthiopia |
| spellingShingle | Birku Reta Entele Shibiru Ayalew The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approach Journal of Applied Economics Economic cost power interruption manufacturing firms Ethiopia |
| title | The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approach |
| title_full | The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approach |
| title_fullStr | The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approach |
| title_full_unstemmed | The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approach |
| title_short | The cost of electricity interruption for manufacturing firms in Ethiopia: valuing outage by applying stated preference approach |
| title_sort | cost of electricity interruption for manufacturing firms in ethiopia valuing outage by applying stated preference approach |
| topic | Economic cost power interruption manufacturing firms Ethiopia |
| url | https://www.tandfonline.com/doi/10.1080/15140326.2024.2394715 |
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