The Federal Government, has increased the wholesale price of gas to power plants by 11% from $2.18 per MMBTU to $2.42/mmbtu (Million British Thermal Unit), leaving power generation companies with additional cost.
The gas companies have since January this year reduced supply to power plants following years of unpaid invoices amounting to over $1.2 billion. The government intervened last month by paying $120 million to the companies, as power supply across the dwindled.
The government in a notice issued by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Farouk Ahmed also raised 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”, said the Petroleum Industry Act, 2021, gave it the powers to set domestic base prices for the local market.
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“In Ine with Section 167, the Third and Fourth Schedule of the PIA 2021, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is mandated to determine the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to the strategic sectors”.
It added that “The Domestic Base Price at the morketable gas delivery point under Section 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 pnce shail not be higher than the average of similar natural gas prices n major emerging countnes 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.
“Accordingly, after due consultation with key stakeholders and taking into cognisance the provisions of the PIA, as well as the gazetted Gas Pricing and Domestic Demand Regulations. the NMDPRA hereby establishes the Year 2024 Domestic Base Price as USD 2.42 / MMBTU and wholesale prices of natural gas in the strategic sector”.
(Editor: Terverr Tyav)
