New Gas Pricing Template and Clearing Power Sector Debts: Boosting Nigeria’s Decade of Gas
A new gas pricing template for the power sector and gas-based industries in Nigeria is awaiting approval from President Bola Tinubu, according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority. The authority also revealed that the legacy gas debts of the power sector to gas suppliers have reached around $1 billion, highlighting the need to address these debts to enhance investor confidence in gas investments.
During the inauguration of the Decade of Gas Secretariat, the Coordinator of the secretariat emphasized the importance of clearing the gas debts in order to provide comfort to investors and boost the domestic usage of gas in Nigeria. The Decade of Gas initiative aims to harness Nigeria’s vast gas reserves and promote its usage across the country from 2021 to 2030.
The outstanding arrears for gas supplied to the power sector are estimated to be between $700 million and $1 billion, and efforts are underway to finalize the figures and find a suitable resolution. The Nigeria Midstream and Downstream Petroleum Regulatory Authority has been working on a new gas pricing template, which is currently under discussion and requires approval from the President. The pricing template aims to incentivize gas producers to supply more gas domestically and reduce the focus on export.
Opinion: Clearing the legacy gas debts and establishing a new gas pricing template are crucial steps in advancing Nigeria’s Decade of Gas initiative. By addressing these issues, the government can instill confidence in investors, promote the domestic usage of gas, and stimulate the growth of the power sector and gas-based industries. It is important to ensure transparency, fairness, and sustainability in the pricing mechanism to create a favorable environment for gas investments in Nigeria.