Hike in electricity tariff looms as Nigerian govt raises gas price

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The federal government has declared that the new price of natural gas for power generation businesses is $2.42 per metric million British thermal units. This is greater than the previous rate of $2.18 million BTU.

The increase may result in a tariff increase for consumers when the Nigerian Electricity Regulatory Commission (NERC) conducts another pricing review.

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The Nigerian Midstream and Downstream Petroleum Regulatory Authority, a Federal Government agency, announced the new domestic base and wholesale natural gas pricing for 2024 on Monday.

The NMDPRA also estimated that the cost of commercial gas would be $2.92mmbtu, up from $2.5mmbtu previously. Farouk Ahmed, the NMDPRA’s Chief Executive, signed the announcement.

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Recall that the Multi-Year Tariff Order released by NERC in January 2024 for the electricity distribution companies was calculated based on the previous natural gas price.

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

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

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