The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has set a new 2024 base gas price for companies in the power sector and commercial users.

This is contained in a statement signed by Farouk Ahmed, the Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

According to the statement, companies in the power sector will pay $2.42 MMBTU for wholesale gas purchases while commercial users will buy natural gas at $2.92 MMBTU.

Furthermore, the NMDPRA referenced provisions of the new Petroleum Industry Act (PIA) as the legal backing for its latest decision.

It stated,

• “The Petroleum Industry Act (PIA) 2021 assented to by the President on the 16th of August 2021 and gazetted on the 27th of August 2021 provides a clear regulatory framework for the determination of a Market-based pricing regime for the domestic gas market in Nigeria.
• “in line 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”
• “Accordingly, after due consultation with key stakeholders and taking into cognisance the provisions of the PIA, as well as the gazetted Gas Pricing and Domestic Demand Regulations, the NMDPRA hereby establishes the Year 2024 Domestic Base Price as USD 2.42 / MMBTU”

Additionally, the NMDPRA set the floor prices for gas-based industries such as producers of ammonia, methanol, low sulphur diesel at $0.90 MMBTU while the ceiling prices is $2.42 MMBTU.

What you should know

• The increase in the base price of domestic gas purchase could likely led to an electricity tariff hike since about 70% of Nigeria’s electricity is generated from natural gas.
• In 2024, the federal government through the Nigeria Electricity Regulatory Commission (NERC) plans to pay N1.67 trillion to subsidise electricity– a 170% increase compared to the figure paid last year.

 [Nairametrics]