The Federal Government made a significant announcement on Monday, revealing a new price for natural gas used by power generation companies.
The rate, now set at $2.42 per metric million British thermal unit (mmbtu), marks an increase from the previous $2.18/mmbtu.
Given that more than 70 percent of Nigeria’s electricity is generated from thermal power plants fueled by gas, this adjustment in cost may result in a subsequent rise in tariffs for power consumers after the Nigerian Electricity Regulatory Commission conducts another review.
This update came via the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), an agency of the Federal Government.
Alongside the revised domestic base price, the commercial gas price also saw an uptick to $2.92/mmbtu from $2.5/mmbtu.
The NMDPRA’s Chief Executive, Farouk Ahmed, formally announced these changes, citing the provisions of the Petroleum Industry Act 2021 as the guiding framework for market-based pricing in the domestic gas sector.
Ahmed explained that the adjustment aligns with Section 167 of the PIA 2021, which mandates the regulator to determine pricing mechanisms based on market dynamics and international benchmarks.
Notably, this move aims to stimulate increased gas production by offering competitive prices to producers.
Through consultations and compliance with regulatory frameworks, the NMDPRA finalized the 2024 Domestic Base Price and wholesale prices, setting the stage for potential shifts in the energy landscape.
