Nigeria’s fiscal burden from power sector subsidies is set to rise after the Federal Government, via the Nigerian Midstream and Downstream Petroleum Regulatory Authority, raised the price of natural gas for electricity generation to $2.18 per million British thermal units.
The NMDPRA confirmed the adjustment in a public statement signed by its Chief Executive, Saidu Mohammed, on Tuesday in Abuja.
Effective April 1, 2026, the new pricing marks a recalibration of Nigeria’s gas market amid ongoing power sector challenges, including supply shortages, rising debts, and liquidity constraints.
At $2.18 per million British thermal units, the new rate is slightly above the 2025 price of $2.13 per MMBtu, reflecting a modest increase of five cents, or roughly 2.35 percent.
This development comes as the Federal Government disbursed only N71.49 billion of the N1.92 trillion electricity subsidy owed to power generation companies in 2025, covering just 3.7 percent of the total.
With the slight increase in gas prices, subsidy costs are expected to climb further, exacerbating the financial challenges facing power generation companies unless policy adjustments are made.
The adjustment also raises concerns that gas-related subsidies and financial obligations across the electricity value chain could expand, given the sector’s heavy reliance on gas-fired generation. With over 75 percent of Nigeria’s electricity coming from gas, pricing decisions have a direct impact on power costs and the government’s subsidy exposure.
In its announcement, the regulator stated that the new price was set in accordance with the Petroleum Industry Act, prevailing market conditions, and existing gas pricing regulations.
“Taking into cognisance the provisions of the PIA, market realities, as well as the gazetted Gas Pricing and Domestic Demand Regulations, the NMDPRA hereby establishes the new Domestic Base Price as $2.18/MMBtu and wholesale prices of natural gas in the strategic sector, effective 1st April 2026,” the statement read.
Under the new regime, gas supplied to the power sector will be priced at $2.18 per MMBtu, establishing the benchmark Domestic Base Price.
The regulator did not specify a separate floor or ceiling for this category, effectively pegging supply to the base rate.
For commercial users, the wholesale price has been set at $2.68 per MMBtu, while gas-based industries—including producers of ammonia, urea, methanol, polypropylene, and low-sulphur diesel, will operate under a more flexible pricing framework.
The authority stated that the pricing structure is designed to promote competitiveness across sectors while ensuring sufficient supply for the domestic market.
“We thank and appreciate all investors in the Domestic Gas Market Sector and assure you of the Authority’s commitment to ensuring transparency, deepening of the domestic gas market, and creating an investor-friendly business environment, as we dutifully implement all the provisions of the regulatory framework,” the regulator added.
