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FG Increases Gas Price to Power Plants by 11%

POSTED ON April 2, 2024 •   Business      BY Abiodun Saheed Omodara
A liquefied natural gas plant l Credit:arstechnica l source:arstechnica.com

The Federal Government has increased the wholesale price of natural gas to power plants by 11 per cent from $2.18 per MMBTU to $2.42/MMBtu (Million British Thermal Unit). This leaves power generation companies with additional costs.


The gas companies had since January this year reduced supply to power plants following years of unpaid invoices that amounted to over $1.2 billion. The government intervened last month by paying $120 million to the companies, as the power supply across the country dwindled.


The government in a notice issued by the Chief Executive, of 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 Authority in the notice titled “Announcement on establishment of the 2024 domestic base price and applicable wholesale price of natural gas for the strategic sector,” said that the Petroleum Industry Act, of 2021, gave it the powers to set domestic base prices for the local market. 

“In Iine with Section 167, the Third and Fourth Schedule of the PIA 2021, the Nigerian Midstream & 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 voluntarily 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 Benchmark.

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