The Federal Government, yesterday, made the decision to increase the wholesale price of gas supplied to power plants by 11 percent, raising it from $2.18 per MMBTU to $2.42/mmbtu (Million British Thermal Unit), resulting in additional expenses for power generation companies.
This adjustment came after gas companies had been reducing their supply to power plants since January due to outstanding invoices totaling over $1.2 billion. To address this issue, the government stepped in last month by disbursing $120 million to these companies, aiming to stabilize power supply across the nation.
In a notice issued to the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Engr Farouk Ahmed, the government also announced an increase in the commercial wholesale gas price from $2.42/mmbtu to $2.92/mmbtu.
The Authority, in the notice titled “Announcement on establishment of the 2024 domestic base price and applicable wholesale price of natural gas for strategic sector”, emphasized that the Petroleum Industry Act, 2021, granted it the authority to establish domestic base prices for the local market.
In line with Section 167 and the Third and Fourth Schedule of the PIA 2021, the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) was tasked with determining the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to strategic sectors.
After thorough consultations with key stakeholders and considering the provisions of the PIA and the gazetted Gas Pricing and Domestic Demand Regulations, the NMDPRA set the Year 2024 Domestic Base Price at USD 2.42 / MMBTU and wholesale prices of natural gas in the strategic sector.
Reacting to the rise in gas prices for power plants, Mr. Adetayo Adegbemle, the Executive Director of PowerUp Nigeria, expressed concerns about the impact on electricity production costs, highlighting gas as a primary fuel for power generation. He emphasized the need for a comprehensive approach to address the challenges posed by the increasing gas prices and the sustainability of electricity tariff subsidies.
