April 2, 2024

The Federal Government has  announced a new Domestic Base Price (DBP)  for the gas market wholesale prices of natural gas for 2024, increasing it up to $2.42 per metric million British thermal units, from the previous rate of $2.18mmbtu.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA)announced this in a statement signed by the Chief Executive, NMDPRA, Farouk Ahmed on Monday, where it also pegged the cost of commercial gas at $2.92mmbtu, up from the previous cost of $2.5mmbtu.

Ahmed said , ” in line 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”.

“The Petroleum Industry Act 2021 assented to by President Bola Tinubu on August 16, 2021, and gazetted in August 2021, provided a clear regulatory framework for the determination of a market-based pricing regime for the domestic gas market.

He further explained that the increase was in line with section 167, the third and fourth schedule of the PIA 2021, which mandated the regulator to determine the Domestic Base Price and the marketable wholesale price of natural gas supplied to the strategic sectors.

He said, “The DBP at the marketable gas delivery point under Sector 167(1) and other provisions of the PIA shall be determined based on regulations which incorporate among such other matters, the following principles.

“(a) The price must be of a level to bring forward sufficient natural gas supplies for the domestic market on a voluntary basis by the upstream producers.

“(b) 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.

“(c) Lowest cost of gas supply based on three-tier cost of supply framework. (d) Market-related prices tied to international benchmarks.”

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 wholesale prices of natural gas in the strategic sector”.