Gas Sector Development in Nigeria: The Nexus between Gas Supply, Price, Utilization, Taxation and Economic Growth

Diala Justina Ochigbo, Nteegah Alwell, Ezurum Alexander Uche and Joseph Andy
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Diala Justina Ochigbo: Emerald Energy Institute, University of Port Harcourt, PMB 5323, Port Harcourt, Rivers State, Nigeria.
Nteegah Alwell: Department of Economics, University of Port Harcourt, PMB 5323, Port Harcourt, Rivers State, Nigeria.
Ezurum Alexander Uche: Center for Petroleum, Energy Economics and Law, University of Ibadan, PMB 5017, Ibadan, Nigeria.
Joseph Andy: Emerald Energy Institute, University of Port Harcourt, PMB 5323, Port Harcourt, Rivers State, Nigeria.

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Abstract: This study examines the relationship between natural gas supply, commercial gas pricing, gas utilisation, gas taxation and economic growth in Nigeria. The analysis employs a range of econometric techniques, including descriptive statistics, correlation analysis, unit root tests, cointegration tests, and ARDL-ECM, to explore the impact of these factors on Nigeria's economic growth. The empirical results reveal that natural gas supply has a positive and significant impact on Nigeria's economic growth, highlighting the potential of this resource to drive development in resource-rich economies. Commercial gas pricing is found to have a significant effect on Nigeria's economy, emphasising the importance of a well-functioning and transparent pricing mechanism for ensuring that the benefits of natural gas are adequately distributed across various sectors. The study identifies a significant relationship between gas utilisation and economic growth, suggesting that efficient and sustainable gas consumption practices are crucial for maximising the economic benefits of this valuable resource. Surprisingly, the analysis shows that gas taxation does not have a significant impact on Nigeria's economic growth. To maximise the potential of natural gas supply, it is recommended that the government invests in infrastructure and encourages private sector participation in the gas sector. In terms of commercial gas pricing, policymakers should establish a transparent and market-oriented pricing system that ensures the benefits of natural gas are adequately distributed across various sectors. For gas utilisation, it is advised that policy makers promote greater gas utilisation in various industries, particularly in the power generation, fertiliser, and petrochemical sectors, to create a more diversified and resilient economy.

Date: 2024-08-10
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Published in Asian Journal of Economics, Finance and Management , 2024, 6 (1), pp.288-304

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