Electricity generation companies, facing gas shortages may be entangled in another crisis as the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) increased prices of natural gas.
While the Nigerian Electricity Regulatory Commission (NERC) had pegged the 2024 Multi-Year Tariff (MYTO) on a gas price of $2.18, the price has soared to $2.42 for every Million British Thermal Units – A thermal unit (MMBTU) in a new template released by NMDPRA.
NMDPRA, which released the pricing on its X official handle disclosed that commercial customers would buy gas at $2.92/MMBTU. NMDPRA based the decision on the provisions of the Petroleum Industry Act (PIA) empowered a regulatory framework for the determination of a market-based pricing regime for the domestic gas market in Nigeria.
The document, signed by the Chief Executive Officer of the agency, Farouk Ahmed noted that the regulatory is mandated to determine the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to the strategic sectors.
Stating that the decision was taken after due consultation with key stakeholders and taking into cognisance the provisions of the PIA, Ahmed said the pricing is for the Domestic Base Price as $2.42/MMBTU and wholesale prices of natural gas.
Currently, most power plants are performing below their capacity in that country given gas challenges. While the Federal Government owes gas companies over $2 billion, the current increase would increase the debt.
The development would also spike the cost of electricity, especially the N1.7 trillion subsidy the government is expected to pay this year.
