The Nigerian Midstream and Downstream Petroleum Regulatory Authority has reduced the price of natural gas for power generation companies in a bid to address the sector’s liquidity crisis.
This move comes as power generation companies reportedly owe gas suppliers around N2 trillion, largely due to persistent revenue shortfalls in the power sector.
According to documents released, the NMDPRA has set a new price of $2.13 per million British thermal units (MMBtu) for gas supplied to GenCos.
This follows the March 2024 revision of the gas pricing framework, which raised prices for the power sector by 11%.
The Domestic Base Price (DBP) for gas to the power sector has increased from $2.18 to $2.42 per MMBtu, while the commercial sector now pays $2.92 per MMBtu, according to the NMDPRA’s revised pricing framework.
However, according to the NMDPRA document titled “Announcement on Establishment of The Year 2025 Domestic Base Price and Applicable Wholesale Price of Natural Gas for the Strategic Sectors”, natural gas will now be sold at $2.13 per MMBtu.
The new pricing framework took effect from April 1, the NMDPRA disclosed.
The document, signed by NMDPRA Chief Executive, Farouk Ahmed, states that in line with Section 167 and the Third and Fourth Schedules of the Petroleum Industry Act (PIA) 2021, the NMDPRA is mandated to determine both the Domestic Base Price and the marketable wholesale price of natural gas supplied to strategic sectors.
The document stated that the DBP was determined based on the principle that it shall not exceed the average price of natural gas in major emerging countries that are significant producers of the resource.
“Accordingly, after due consultation with key industry stakeholders and taking into cognisance the provisions of the PIA and market realities, the NMDPRA hereby establishes the new Domestic Base Price as USD 2.13/MMBtu and wholesale prices of natural gas in the strategic sector, effective 1 April 2025,” the NMDPRA announced.
