• Monday, April 22, 2024
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BusinessDay

NMDPRA increases gas price for strategic sectors

Petrol imports drop as FX shortage squeezes marketers

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has announced a new base price for natural gas at $2.42 per Million British Thermal Unit (MMBTU) for power sector and $2.92 for commercial users.

Farouk Ahmed, the chief Executive of the Authority, in a letter sighted by BusinessDay, explained that the Petroleum Industry Act (PIA) 2021 assented to by the President on the 16″ of August 2021 and gazetted on the 27″ of August 2021 provides a clear regulatory framework for the determination of a Market-based pricing regime for the domestic gas market in Nigeria.

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According to him, the Domestic Base Price (DBP) at the marketable gas delivery point under Section 167 (1) and other provisions of the PIA shall be determined based on regulations.

He noted that the DBP must be of a level to bring forward sufficient natural gas supplies for the domestic market on a voluntary basis by the upstream producers, “the price shall not be higher than the average of similar natural gas prices in major emerging countries that are significant producers of natural gas, lowest cost of gas supply based on three tier cost of supply framework, market related prices tied to international benchmarks.

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“In line with Section 167, the Third and Fourth Schedule of the PIA 2021, they Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) is mandated to determine the Domestic Base Price (DBP) and the market wholesale price of natural gas supplied to the strategic sectors.

“Accordingly, after due consultation with key stakeholders and taking into cognisance the provisions of the PIA, as well as the gazetted Gas Pricing and Domestic Demand Regulations. the NMDPRA hereby establishes the Year 2024 Domestic Base Price as USD 2.42 / MMBTU and wholesole prices of natural gas in the strategic sector,” he said.