THE federal government announced yesterday a new natural gas pricing for power production companies.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), a Federal Government agency, announced the new domestic base and wholesale prices for natural gas for 2024, raising them to $2.42 per metric million British thermal units from the previous rate of $2.18mmbtu.
The Chief Executive of NMDPRA, Farouk Ahmed, announced and signed the agreement, which also increased the cost of commercial petrol to $2.92mmbtu from the previous $2.5mmbtu.
Ahmed stated that the Petroleum Industry Act 2021, signed by President Bola Tinubu on August 16, 2021 and gazette in August 2021, established a clear legal framework for determining a market-based pricing system for the domestic gas market.
He further stated that the rise was in accordance with section 167, the third and fourth schedules of the PIA 2021, which required the regulator to calculate the Domestic Base Price and the marketable wholesale price of natural gas delivered to strategic sectors.
He said, “The DBP at the marketable gas delivery point under Sector 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 on a voluntary basis 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 benchmarks.”
The NMDPRA went on to say that it established the “2024 Domestic Base Price at $2.42/MMBTU and wholesale prices for natural gas in strategic sectors, following consultations with stakeholders and in compliance with the PIA and Gas Pricing Regulations.”
