Econometric estimation of the petroleum products consumption in Nigeria: Assessing the premise for biofuels adoption

• Estimated petroleum products consumption in Nigeria.
• Discussed the historical trends of the petroleum products consumption in Nigeria.
• Discussed the implications of the econometric analysis for the biofuels policy in Nigeria.

The promotion and adoption of biofuels in Nigeria must be predicated on sufficient capacity for absorbing biofuels produced from the increasing investments in biofuels plantations, plants and processing facilities. This paper assesses the socioeconomic and related premises for biofuels development in Nigeria by conducting an econometric estimation of the petroleum products consumption. The paper first estimates aggregated petroleum product consumption, and then assess the response to specific petroleum products in terms of consumption, market (population), electricity generation, installed electricity generation capacity, and GDP. The result shows that all the petroleum products contribute significantly and about equally to aggregate petroleum consumption. The high proportion of petrol (about 44 percent) as a percentage of the aggregate petroleum product consumption validates the push for implementing the E10 petrol-ethanol blending for Nigeria. The consumption of diesel is also significant. Diesel is another petroleum product for which D20 biofuel blending policy has been proposed. The increase in population and GDP, coupled with the poor electricity situation, will keep driving the consumption of petroleum products. As the population increases, and the country continues to struggle to match electricity generation with population growth, the petrol-ethanol and diesel-biodiesel blending policy must be pursued tenaciously to ensure a reduction in carbon emission in Nigeria.