In response to years of unpaid invoices and dwindling gas supply to power plants, the Nigerian federal government has announced a significant 11 percent increase in the wholesale price of gas to power plants, raising it from $2.18 per Million British Thermal Unit (MMBTU) to $2.42/mmbtu.
This decision comes after months of intervention efforts and amidst mounting concerns over the country’s energy crisis.
The reduction in gas supply to power plants by gas companies since January this year, owing to unpaid invoices totaling over $1.2 billion, has led to severe disruptions in power supply across the nation. To alleviate the situation, the government intervened last month by disbursing $120 million to the gas companies, aiming to stabilize power generation.
According to a notice issued by Engr Farouk Ahmed, Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the government has also raised the commercial wholesale gas price from $2.42/mmbtu to $2.92/mmbtu. This move, outlined in the notice titled “Announcement on establishment of the 2024 domestic base price and applicable wholesale price of natural gas for strategic sector,” is in line with the provisions of the Petroleum Industry Act (PIA) 2021.
The NMDPRA, empowered by the PIA 2021, is mandated to determine the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to strategic sectors. The increase in gas prices reflects the government’s efforts to address the challenges faced by the energy sector, while ensuring the viability and sustainability of gas supply to strategic sectors such as power generation.
However, the decision to raise gas prices may have far-reaching implications for consumers, particularly in terms of electricity tariffs and overall cost of living. It remains to be seen how the market will respond to these price adjustments and whether they will lead to improved gas supply and stability in power generation across Nigeria.
As the government takes steps to address the complexities of the energy sector, stakeholders will closely monitor the implementation and impact of these measures, with a keen focus on ensuring equitable access to reliable and affordable energy for all Nigerians.Nigerian Government Increases Gas Prices Amid Supply Shortages and Unpaid Invoices
In response to years of unpaid invoices and dwindling gas supply to power plants, the Nigerian federal government has announced a significant 11 percent increase in the wholesale price of gas to power plants, raising it from $2.18 per Million British Thermal Unit (MMBTU) to $2.42/mmbtu. This decision comes after months of intervention efforts and amidst mounting concerns over the country’s energy crisis.
The reduction in gas supply to power plants by gas companies since January this year, owing to unpaid invoices totaling over $1.2 billion, has led to severe disruptions in power supply across the nation.
To alleviate the situation, the government intervened last month by disbursing $120 million to the gas companies, aiming to stabilize power generation.
According to a notice issued by Engr Farouk Ahmed, Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the government has also raised the commercial wholesale gas price from $2.42/mmbtu to $2.92/mmbtu. This move, outlined in the notice titled “Announcement on establishment of the 2024 domestic base price and applicable wholesale price of natural gas for strategic sector,” is in line with the provisions of the Petroleum Industry Act (PIA) 2021.
