Electricity rate increase looms as FG raises gas price

The Federal Government has increased the wholesale price of gas to power plants by 11 percent from $2.18 per MMBTU to $2.42/mmbtu (Million British Thermal Unit).

The government also raised the commercial wholesale gas price from $2.42/mmbtu to $2.92/mmbtu.

The increment was contained in a notice issued on Monday by Engr Farouk Ahmed, Chief Executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority(NMDPRA), titled “Announcement on establishment of the 2024 domestic base price and applicable wholesale price of natural gas for strategic sector”.

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

Nigeria generates over 70 per cent of its electricity from thermal power plants that are fired by gas.

Increase in the cost of the commodity may lead to a hike in the tariff payable by power consumers once the Nigerian Electricity Regulatory Commission carries out another tariff review.

Reacting to the hike in gas price to power plants, the Executive Director, PowerUp Nigeria, Mr Adetayo Adegbemle, said the increase would raise the cost of power generation as gas was a major fuel for power plants.

“The major fuel stock for our power generation is gas, and increment in gas pricing will definitely impact cost of production of electricity”, Adegbemle noted.