The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has slashed the domestic base price of natural gas for power generation companies from $2.42 to $2.13 per metric million British thermal units (MMBTU), in a move expected to ease pressure on Nigeria’s gas-dependent power sector.
The new pricing, which took effect in April, reflects a $0.29 per MMBTU reduction and also applies to commercial gas users, who will now pay $2.63 per MMBTU—down from the previous $2.92. Prices for gas-based industries such as ammonia, urea, methanol, and low sulphur diesel were pegged between a floor of $0.9 and a ceiling of $2.13 per MMBTU.
According to a circular issued by the NMDPRA, the adjustments are in line with Section 167 of the Petroleum Industry Act (PIA) 2021, which mandates the regulator to determine domestic base and wholesale prices of gas sold to strategic sectors of the economy. The authority said the new rates are designed to ensure sufficient supply for the domestic market while keeping prices comparable to those in major emerging natural gas-producing countries.
Farouk Ahmed, NMDPRA’s chief executive, explained that the domestic base price must be market-related, tied to international benchmarks, and low enough to encourage upstream producers to voluntarily supply gas locally.
Although the move is expected to benefit power generating companies, experts say its broader effect on electricity tariffs will likely be limited. Oyeyemi Oke, a partner at AO2LAW, pointed out that while the price reduction is a positive signal for the domestic market, other gas producers must follow suit for the impact to be felt more widely. He added that the 29-cent reduction is marginal and unlikely to significantly affect electricity prices due to the high cost of infrastructure involved in power generation.
“Gas is not the only component in power cost,” Oke said. “The fixed cost, which includes infrastructure and equipment, often exceeds the variable cost of gas itself. So while this is a step forward, it won’t automatically translate to cheaper power for consumers.”
Oke also expressed concerns about the broad classification of “commercial sector” in the new pricing framework, suggesting that more clarity is needed on which ventures or industries qualify under this label.
Eko Uket, executive secretary of the Network for Electricity Consumers Advocacy of Nigeria, echoed these concerns. He argued that denominating domestic gas prices in US dollars continues to be a major drawback, especially given the volatility of the naira. He also noted that while the base price of gas has been reduced, ancillary costs such as gas transportation and statutory charges remain unchanged—limiting any direct benefit to electricity consumers.
Despite the lukewarm reception by consumer advocates, the price review signals a policy shift by the federal government to create a more competitive and sustainable gas market. With Nigeria generating over 70 percent of its electricity from gas-fired plants, such interventions may be necessary to stabilise supply and attract private investment in the long term.
However, analysts maintain that a broader structural overhaul—beyond pricing—is required to address the persistent challenges in Nigeria’s power sector.
