The Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) has stirred discussions with its recent announcement of a price hike in natural gas for strategic sectors, potentially impacting the ongoing agitations against electricity tariff increases.
In a statement released by NMDPRA’s Chief Executive, Farouk Ahmed, the authority revealed a new tariff regime for gas, bumping up the price for power Generation Companies (Gencos) to $2.42 per cubic feet from the previous $2.18 maintained since 2021. Additionally, commercial gas prices have surged from $2.50 to $2.92 per cubic feet.
This move casts doubts on the validity of the Multi-Year Tariff Order (MYTO) calculated by the Nigerian Electricity Regulatory Commission (NERC) earlier this year, which was based on the previous gas price. Farouk referred to the Petroleum Industry Act (PIA) 2021 as the legal framework guiding this decision, emphasizing its mandate for a market-based pricing regime in the domestic gas market.
The statement elaborated on the regulatory principles guiding the determination of gas prices, including factors such as ensuring sufficient gas supply, benchmarking against international prices, and adopting market-related pricing strategies.
Following consultations with stakeholders and in compliance with the PIA and gazetted Gas Pricing and Domestic Demand Regulations, NMDPRA established the Year 2024 Domestic Base Price at $2.42 per MMBTU and set wholesale prices for natural gas accordingly.
