In a significant development, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), an agency of the Federal Government, has announced a hike in the price of natural gas for power generation companies.
The new domestic base price and wholesale prices for natural gas in 2024 have been set at $2.42 per metric million British thermal units (mmbtu), up from the previous rate of $2.18mmbtu.
The announcement, disclosed and signed by the Chief Executive of NMDPRA, Farouk Ahmed, cited provisions of the Petroleum Industry Act 2021, which established a regulatory framework for a market-based pricing regime in the domestic gas market.
According to Ahmed, the increase is in line with the directives outlined in section 167 of the PIA 2021, which mandates the regulator to determine pricing structures for natural gas supplied to strategic sectors.
Ahmed elaborated on the principles guiding the determination of gas prices, emphasizing factors such as ensuring sufficient gas supplies for the domestic market, benchmarking against international prices in significant gas-producing countries, and adopting a three-tier cost of supply framework.
The NMDPRA stressed that the decision to set the 2024 Domestic Base Price at $2.42/mmbtu and wholesale prices for natural gas in strategic sectors followed consultations with stakeholders and compliance with the PIA and Gas Pricing Regulations.