Fear Mounts Over Possible Electricity Tariff Hike As FG Raises Gas Price

The Federal Government has through the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) announced an increase in the price of natural gas for some sectors, and this may lead to a hike in electricity tariff.

A statement from the NMDPRA and signed by its Chief Executive, Farouk Ahmed, the Authority, said the price of the commodity for power Generation Companies (Gencos) had now been raised from $2.18 per cubic feet to $2.42.

The statement indicated that for commercial gas, the price had increased from $2.50 to $2.92 per cubic feet.

The statement said the development was in line with Section 167, the Third and Fourth Schedule of the PIA 2021, which authorised the agency to determine the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to the strategic sectors.

The statement said: “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: 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; 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; lowest cost of gas supply based on three tier cost of supply framework; 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 $2.42 / MMBTU and wholesale prices of natural gas in the strategic sector, and $2.92 for commercial gas,”the statement said.