FG Rolls Out Revised Gas Pricing Scheme for Electricity Firms

The Federal government’s declaration on Monday unveiled a fresh tariff structure for natural gas aimed at electricity companies

The NMDPRA, acting on behalf of the Federal Government, released the new domestic base and wholesale prices for natural gas in 2024, boosting it to $2.42 per metric million British thermal units, up from the former $2.18mmbtu, in a move likely to impact energy markets.

Endorsed and sealed by Farouk Ahmed, the Chief Executive of NMDPRA, the decree also established the price of commercial gas at $2.92mmbtu, marking an increase from the former $2.5mmbtu rate.

Ahmed underscored that the enactment of the Petroleum Industry Act 2021, approved by President Bola Tinubu on August 16, 2021, and officially recorded in August 2021, furnished a well-defined regulatory blueprint for instituting a market-based pricing mechanism in the domestic gas sphere.

He further clarified, stating that the augmentation followed the guidelines laid out in section 167 of the third and fourth schedules of the PIA 2021, which mandated the regulator to ascertain both the Domestic Base Price and the marketable wholesale price of natural gas provided to crucial sectors.

Read also: Electricity Demand Rose To 12.12 Million In Q4 2023 – NBS

He said, “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.”

The NMDPRA then emphasised that it had 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.”

Africa Today News, New York

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