Data Envelopment Analysis DEA of Natural Gas Utilization in Nigeria

Abstract

Nigeria has huge natural gas resources, yet there is a great concern on the availability of natural gas supply for primary energy requirement to power its economy. This paper focuses on evaluating the efficiency of natural gas utilization in Nigeria from 1995 to 2017. Its purpose is to evaluate gas use with respect to industrial development and susceptibility of GDP to a sudden decrease in natural gas production. Data Envelopment Analysis (DEA), which is a mathematical (optimization) tool for assessing the relative efficiencies of decision making units (DMU), was applied to show that natural gas is not fully utilized in Nigeria and has thus impacted economic growth negatively. The vulnerability indexes for the period under consideration were high, suggesting that Nigeria is not self-sufficient in natural gas. In addition, there is strong evidence from empirical results to suggest that as gas consumption increases GDP rises as well. This implies that a right policy framework and implementation strategies need to be in place to advance Nigeria's economic growth aspiration.