Nigeria Lifts Gas Price for Power Companies to $2.18/MMBtu

The Nigerian government has increased the price of natural gas sold to power generation companies by five cents, the country’s Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said on Tuesday. 

The agency described the raise as a modest adjustment that lands on an electricity sector already strained by billions of dollars in accumulated debt.

According to the circular announcing the development, the NMDPRA said that the new domestic base price, the lowest at which natural gas can change hands in the local market, will go up to $2.18 per metric million British thermal units from $2.13, starting this April. 

“Taking into cognisance the provisions of the PIA, market realities, as well as the gazetted Gas Pricing and Domestic Demand Regulations,” said Saidu Mohammed, chief executive officer of the regulatory body who signed the circular. 

Commercial users will face a steeper bill, paying $2.68 per MMBtu under the new schedule, up from $2.63. Gas-based industries, including producers of ammonia, urea, methanol, and low-sulphur diesel, will operate within a price band, with a floor of $0.90 per MMBtu and a ceiling set at the new domestic base price of $2.18.

The NMDPRA said pricing decisions are guided by principles established under Section 167(1) of the Petroleum Industry Act, including ensuring that prices are sufficient to attract voluntary gas supplies from upstream producers, remain competitive with benchmark rates in major emerging market gas-producing nations, and reflect the lowest cost of supply under a three-tier framework tied to international benchmarks.

The incremental nature of the increase reflects a delicate balancing act for Abuja. Nigerian power generation companies have long operated under financial distress, hamstrung by a combination of unpaid electricity bills, foreign-exchange shortfalls, and gas supply constraints that have kept the national grid chronically underperforming relative to demand.