Oredola Adeola

The Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has unveiled the domestic base price (DBP) and wholesale prices of natural gas for 2024, increasing the gas price for power Generation Companies (GenCos) from $2.18mmbtu to $2.42/mmbtu, while commercial gas prices surged from $2.50mmbtu to $2.92mmbtu, hinting at a potential electricity tariff hike in the near future.

This announcement was made in a statement signed by Farouk Ahmed, the Chief Executive of the Authority, and obtained by Advisors Reports.

Advisors Reports therefore gathered that this latest decision by NMDPRA has brought an end to the January 2024, the Multi-Year Tariff Order (MYTO) 2024 issued by Nigerian Electricity Regulatory Commission (NERC) for the electricity distribution companies (DisCos)  calculated when natural gas was sold to the GenCos at $2.18c.

According to the ACE, the Petroluem Industry Act (PIA) 2021 assented to by the President on the August 16, 2021, and gazetted in August 2021 provides a clear regulatory framework for the determination of a Market-based pricing regime for the domestic gas market in Nigeria.

The Authority further stated that the action was taken in line section 167, the third and fourth schedule of the PIA 2021, mandated the regulator to determine the Domestic Base Price (DBP) and the marketable wholesales price of natural gas supplied to the strategic sectors.

It said, “The domestic base price at the marketable gas delivery point under Sector 167(1) and oother 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 voluntaty basis by the upstream producers.

“(b) The price shall not be higher than the average of similar batural 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 Internationa Benchmarks.

NMDPRA therefore emphasised that it has set 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,