The Federal Government has announced an increase in the price of natural gas for power generation companies, signaling a potential rise in power tariffs for consumers. The new price of $2.42 per metric million British thermal unit (mmbtu) is higher than the previous rate of $2.18mmbtu, reflecting a significant adjustment in gas pricing.
Given that over 70 percent of Nigeria’s electricity is generated from thermal power plants fueled by gas, this price hike could have implications for consumers’ electricity bills pending a tariff review by the Nigerian Electricity Regulatory Commission.The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) unveiled the new domestic base price and wholesale prices of natural gas for 2024. Additionally, the cost of commercial gas has been increased to $2.92mmbtu from the previous $2.5mmbtu.
The announcement, signed by the Chief Executive of NMDPRA, Farouk Ahmed, highlights the importance of gas pricing in determining power tariffs, as gas plays a vital role in electricity production.With the latest adjustment in natural gas prices, there is a strong likelihood of an upward revision in power tariffs, given the significant reliance on gas in power generation.