A new natural gas pricing for enterprises that generate electricity was announced by the federal government on Monday.
An agency of the Federal Government, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), unveiled the new domestic base price and wholesale prices of natural gas for 2024, jacking it up to $2.42 per metric million British thermal units, from the previous rate of $2.18mmbtu.
It was also announced and signed by Farouk Ahmed, the CEO of NMDPRA, and it increased the price of commercial gas from $2.5 million to $2.92 million.Ahmed added that a clear legislative framework for determining a market-based pricing regime for the domestic gas market was provided by the Petroleum Industry Act 2021, which was gazetted in August 2021 and approved by President Bola Tinubu on August 16, 2021.
He went on to say that the increase complied with section 167, the third and fourth schedules of the PIA 2021, which required the regulator to ascertain the marketable wholesale price of natural gas delivered to the strategic sectors as well as the Domestic Base Price.
In accordance with Sector 167(1) and other PIA laws, he stated, “The DBP at the marketable gas delivery point 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 went on to emphasize that, after consulting with stakeholders and in accordance with the PIA and Gas Pricing Regulations, it had determined the “2024 Domestic Base Price at $2.42/MMBTU and wholesale prices for natural gas in strategic sectors.”