IMPLICATIONS OF ENVIRONMENTAL TAX ON PERFORMANCE OF ELECTRICITY GENERATION FIRMS IN NIGERIA:

A FOCUS ON AFAM POWER LIMITED

Abstract

This study examined the implications of environmental tax on the performance of electricity generation firms in Nigeria a study of Afam power limited. The specific objectives were: to determine the implication of carbon emission tax; to ascertain the implication of electricity value added tax, and to evaluate the effect of Petroleum Profit Tax on the performance of Afam Power Limited. The ex post facto research was adopted, and secondary data on the total assets (dependent variable), carbon emission tax, and electricity value added tax. The study employed the ordinary last squares technique (OLS) to analyze the data. The results showed evidence of negative correlation between environmental taxation and the performance of Afam Power Limited. The major findings of the study indicated that carbon emission taxes had significant negative impact on the performance of electricity generatingfirms in Nigeria; electricity value added tax has significant negative effect on the performance of electricity generatingfirms in Nigeria; and petroleum
profit tax has significant negative effect on the performance of electricity generating firms in Nigeria. The study concluded that environmental tax had significant negative implication on the performance of electricity generating firms in Nigeria for the period reviewed. Based on the findings, the study therefore recommended that policymakers should design a strategy toward reexamining the carbon emission taxes due to evidence of negative shock on the performance of the electricity generating companies; the
electricity value added tax should be removed or significantly reduced, this will mitigate reduction in electricity consumer demand arising from increase is price that is traced to electricity value added tax; and the petroleum profit tax may also need to be reviewed as there is interconnectedness of energy firms, the electricity generation companies and the electricity distribution companies.