FG raises gas price amid erratic power supply
By Damilare Adeleye
The Federal Government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has announced a new price of natural gas supplied to power generation companies, raising it to $2.18 per metric million British thermal units (MMBTU).
In a circular issued on Tuesday, the Authority Chief Executive of NMDPRA, Farouk Saidu Mohammed, stated that the new pricing regime will take effect from April 1, 2026.
NMDPRA disclosed that the new rate represents a $0.05 increase from the previous price of $2.13/MMBTU.
The regulator also announced that the updated Domestic Base Price (DBP) and wholesale gas pricing for the domestic market have been set at $2.18/MMBTU, serving as the minimum price for gas sales within Nigeria.
Similarly, commercial users will now pay $2.68/MMBTU, up from $2.63/MMBTU.
Gas-based industries, including ammonia, urea, methanol, and low-sulphur diesel producers, will operate within a price band ranging from a floor of $0.9/MMBTU to a ceiling of $2.18/MMBTU.
The authority explained that prices for gas-based industries will be determined using a formula outlined in the Fourth Schedule of the Petroleum Industry Act (PIA), ensuring cost-reflective pricing across the value chain.
“Accordingly, taking into cognisance the provisions of the PIA, market realities, as well as the gazetted Gas Pricing and Domestic Demand Regulations, the NMDPRA hereby establishes the new Domestic Base Price as $2.18/MMBTU and wholesale prices of natural gas in the strategic sector, effective April 1, 2026,” the circular partly read.
The regulator emphasised that the pricing regime was guided by key principles, including the need to incentivise upstream producers to supply sufficient gas to the domestic market, maintain competitiveness with prices in comparable emerging economies, and align domestic gas prices with international benchmarks.
NMDPRA expressed confidence that the new pricing structure will deepen the domestic gas market, enhance transparency, and foster an investor-friendly environment in Nigeria’s energy sector.
However, the development comes against the backdrop of persistent challenges in Nigeria’s power sector, with generation companies already grappling with gas supply constraints.
Industry operators have raised concerns over dwindling gas supply, largely attributed to outstanding debts owed to suppliers.
The Chief Executive Officer of the Association of Power Generation Companies, Joy Ogaji, had earlier disclosed that the Federal Government owes GenCos about N6T, a liability that continues to strain operations across the sector.
Analysts warn that the latest increase in gas prices could further exacerbate the power sector’s gas constraint challenge, with potential implications for electricity generation and supply nationwide.