Interfuel substitution: the case of the Nigerian industrial sector

Abstract

The purpose of this paper is to investigate energy substitution possibility among the fuel types used in the industrial sector of the Nigerian economy. An econometric model, utilizing the translog cost func-tion, is estimated for nine major industries in the industrial sector - non-metal, basic metal, fabricated metal, chemicals, food and beverages, paper, tex-tile, wood and others. Fuels are aggregated into four categories: electricity, oil, gas and coal. The model is estimated using time series data over the period 1970 - 2000. The results vary across the industries for different fuels. The conclusion provides future directions for interfuel substitution in the industrial sector of the Nigerian economy.