FG Increases Gas Prices by 11%, Posing Challenges for Power Generation Companies

Date:

The Federal Government announced yesterday a significant 11% increase in the wholesale price of gas supplied to power plants, raising concerns about additional operational costs for power generation companies.

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The decision comes amidst a backdrop of reduced gas supply to power plants since January, attributed to years of outstanding invoices totaling over $1.2 billion. To address this issue, the government intervened last month by disbursing $120 million to gas companies, aiming to stabilize power supply across the country.

In a notice issued by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Engr Farouk Ahmed, the government also raised the commercial wholesale gas price from $2.42/mmbtu to $2.92/mmbtu.

The notice, titled “Announcement on establishment of the 2024 domestic base price and applicable wholesale price of natural gas for strategic sector,” cited provisions of the Petroleum Industry Act, 2021 (PIA), empowering the NMDPRA to set domestic base prices for the local market.

According to the notice, the Domestic Base Price (DBP) and wholesale prices of natural gas for strategic sectors will be determined based on principles outlined in the PIA, including ensuring sufficient gas supplies for the domestic market, benchmarking against international prices, and maintaining a competitive cost structure.

Reacting to the gas price hike, Executive Director of PowerUp Nigeria, Mr. Adetayo Adegbemle, expressed concerns about its impact on power generation costs. He highlighted gas as a primary fuel for power plants, indicating that any increase in gas prices would inevitably raise the cost of electricity production.

Adegbemle emphasized the challenges faced by the Federal Government in subsidizing electricity tariffs, particularly amidst the recent increase in gas prices. He called for a reassessment of subsidy policies, stressing the need for a sustainable approach to addressing the issue.

The decision to raise gas prices underscores the ongoing challenges in balancing the costs of energy production with the need for sustainable and affordable electricity supply across Nigeria.

Gbenga Samson
Gbenga Samsonhttp://ThisDayLive.com
Samson Gbenga Salau [Editorial Board Adviser] Gbenga Samuel Salau is a professional journalist with over 17 years experience in journalism, he is a graduate of Communication and Language Arts, University of Ibadan. On completion of his youth service, he joined The Guardian as a freelance journalist and was later absorbed as a staff. While in the University, he was a campus journalist reporting for the Independence Hall and Faculty of Arts Press Clubs. As a campus journalist, he won the following awards; Independence Hall Press Best News writer; University of Ibadan Union of Campus Journalists’ Best News Reporter/Writer; First Runner-up, Reuben Abati Award for Investigative Journalism; Association of Faculty of Arts Students’ Press Best Reporter; University of Ibadan Union of Campus Journalists’ Best Political Writer; Winner, Reuben Abati Award for Investigative Journalism, and University of Ibadan Union of Campus Journalists’ Best Interviewer. He served the Association of Communication and Language Arts Students, as the Public Relation Officer, the same year he was appointed the News Editor of the Association of Faculty of Arts Students Press. The following session, he was made the General Editor, and a member of the 13-man University of Ibadan Students’ Union Transition Committee. As a reporter in The Guardian, in 2014, he won the Promasidor Quill Award Best Report on Nutrition and DAME Business Reporting category. In the 2015 edition of the Promasidor Quill Award, he won the best Report on Nutrition and Brand Advocate Categories, while in 2016, he won the NMMA Print Journalist of the Year, first runner-up Golden Pen Reporter of the Year and SERAs CSR Awards. Gbenga Salau loves traveling, reading, and listening to songs with good lyrics no matter the genre.

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