The federal government has announced an increase in the wholesale price of gas to power plants by 11 per cent from $2.18 per MMBTU (Million British Thermal Unit) to $2.42/mmbtu.
The gas companies had since January this year reduced supply to power plants following years 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, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Engr Farouk Ahmed, also raised the commercial wholesale gas price from $2.42/mmbtu to $2.92/mmbtu.
The Authonty in the notice titled “Announcement on establishment of the 2024 domestic base price and applicable wholesale price of natural gas fot strategic sector”, said the Petroleum Industry Act, 2021, gave it the powers to set domestic base prices for the local market.
“In Ine with Section 167, the Third and Fourth Schedule of the PIA 2021, the Nigerian Mdstream & 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: “The Domestic Base Price at the marketable 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 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.
“Accordingly, after due consultation with key stakeholders and toking 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.”