Energy: Nigeria raises natural gas price for power generation companies

*The Nigerian Midstream and Downstream Petroleum Regulatory Authority explains the agency has set the 2024 Domestic Base Price at $2.42/mmbtu and wholesale prices for natural gas in strategic sectors in consultation with industry stakeholders and compliance with the PIA 2021 and Gas Pricing Regulations

Isola Moses | ConsumerConnect

The Nigerian Government has announced a new price of natural gas for power Generation Companies (GENCOS) in the West African country.

Farouk Ahmed, Chief Executive Officer (CEO) of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), a Federal Government regulatory agency, who disclosed this development in a statement issued Monday, April 1, 2024, unveiled the new domestic base price and wholesale prices of natural gas for 2024.

The Government jacked up the domestic base price and wholesale prices of natural gas to $2.42 per metric million British thermal units, from the previous rate of $2.18mmbtu.

The agency also raised the cost of commercial gas at $2.92mmbtu from the previous cost of $2.5mmbtu.

Ahmed also noted the Petroleum Industry Act (PIA) 2021, which President Bola Ahmed Tinubu assented to August 16, 2021, and subsequently gazetted August 2021, provides a clear regulatory framework for the determination of a market-based pricing regime for the domestic gas market.

The Chief Executive of NMDPRA as well explained that the latest price hike is in line with Section 167, 3rd and 4th Schedules of the PIA 2021.

The provisions mandate the energy industry regulator to determine the Domestic Base Price and the marketable wholesale price of natural gas supplied to the strategic sectors of the Nigerian economy.

“The DBP at the marketable gas delivery point under Sector 167(1) and other provisions of the PIA shall be determined based on regulations which incorporate among such other matters, the following principles.

“(a) The price must be of a level to bring forward sufficient natural gas supplies for the domestic market on a voluntary basis by the upstream producers.

“(b) The price shall not be higher than the average of similar natural gas prices in major emerging countries that are significant producers of natural gas.

“(c) Lowest cost of gas supply based on three-tier cost of supply framework. (d) Market-related prices tied to international benchmarks,” Ahmed stated.

According to NMDPRA, the agency has set the “2024 Domestic Base Price at $2.42/MMBTU and wholesale prices for natural gas in strategic sectors, following consultations with stakeholders and in compliance with the PIA and Gas Pricing Regulations.”