Nigerian govt raises gas price, sparking fears of increase in electricity tariff

The Federal Government, on Monday, announced new price of natural gas for power generation companies sparking concerns of impending increase in electricity tariff.

According to the new price regime, a metric million British thermal unit now goes for $2.42 higher than the previous rate of $2.18mmbtu.

The new domestic base price and wholesale prices of natural gas for 2024 was unveiled by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on Monday.

The NMDPRA also pegged the cost of commercial gas at $2.92mmbtu, up from the previous cost of $2.5mmbtu. The announcement was signed by the Chief Executive, NMDPRA, Farouk Ahmed.

READ ALSO:NBS report says Nigerians paid more for cooking gas in February 2024

Ripples Nigeria reports that Nigeria generates over 70 per cent of its electricity from thermal power plants that are fired by gas. Therefore, the rise in the cost of the commodity may lead to a hike in the tariff payable by power consumers once the Nigerian Electricity Regulatory Commission carries out another tariff review.

It would also be recalled that the Multi-Year Tariff Order released by NERC in January 2024 for the electricity distribution companies was calculated based on the previous price of natural gas.

Therefore, going by the latest cost of the commodity, there is a high posibility for an upward review of power tariffs, as gas is a major component used in power production.

Gas producers including international and domestic oil and gas companies, have repeatedly called for the upward review in the price of the product, stressing that this would be an incentive to ramp up production.

By: Babajide Okeowo

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