Development of a Governance Quality Index for Nigeria’s Gas Sector and Its Relationship with Investment and Supply Performance

Governance quality in the oil and gas sector is widely recognised as a determinant of investment climate and operational performance, but no sector-specific, empirically validated governance quality index has been developed for Nigeria's gas sector, limiting both academic analysis and evidence-based policy reform. This study develops an original Gas Sector Governance Quality Index (GSGQI) for Nigeria and empirically investigates its relationship with investment inflows and domestic gas supply performance over the period 2000 to 2023. The GSGQI is constructed through a multi-stage methodology: a Delphi expert consultation process with 35 gas sector governance experts identifies governance dimensions and relative weights, a structured document analysis framework extracts annual governance quality scores from regulatory publications, legislative records, judicial decisions, and third-party governance assessments, and a composite index aggregation methodology drawing on principal components analysis is applied to generate annual GSGQI values. Governance dimensions included in the index are: regulatory independence and capacity, rule of law and contract enforceability, transparency and accountability, stakeholder participation, anti-corruption effectiveness, and policy coherence and stability. The empirical relationship between the GSGQI and investment inflows and domestic gas supply is estimated using a vector error correction model (VECM), with Granger causality tests used to determine the direction of causal relationships. The study's original theoretical contributions include: the first published composite governance quality index for the Nigerian gas sector, a governance-investment transmission mechanism model explaining how specific governance failures translate into investment deterrence, and a governance reform sequencing theory derived from comparative analysis with Ghana and Mozambique. Findings demonstrate that improvements in regulatory independence and contract enforceability dimensions produce the strongest investment response. Recommendations include immediate legislative reform to strengthen NUPRC statutory independence and a transparent annual GSGQI publication by an independent research institution. Keywords: governance quality, gas sector, investment, Nigeria, governance index.