The recent announcement by the Nigerian government regarding an 11% increase in the wholesale price of gas to power plants has sparked concerns over the country’s electricity supply.
The decision, which raises the price to $2.42 per Million British Thermal Unit (MMBTU) from $2.18 per MMBTU, comes amidst persistent electricity challenges in Nigeria.
Issued by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Engr Farouk Ahmed, the notice cited consultations with key stakeholders and adherence to relevant regulations as the basis for the adjustment.
This move affects the cost incurred by electricity generation companies in purchasing gas, a crucial component in power generation.
The implications of this price hike are significant. With power plants having to pay more for gas, concerns arise regarding the potential impact on electricity tariffs and the overall stability of the power sector.
Nigeria has been grappling with a longstanding issue of inadequate power supply, affecting industries, businesses, and households across the country.
The timing of the gas price increase adds to existing challenges faced by the power sector. Minister of Power, Adebayo Adelabu, had previously criticized the practice of pricing gas in dollars, emphasizing the need for a review.
Also, gas companies had reduced their supply to power plants since January due to unpaid invoices totaling over $1.2 billion, further straining the power supply.
While the government intervened in March by paying $120 million to these companies, the persistence of power outages underscores the systemic issues within the sector.
Reacting to the development, stakeholders like Adetayo Adegbemle, Executive Director of PowerUp Nigeria, expressed concerns over the government’s decision.
He highlighted the financial burden placed on the sector amidst existing challenges, suggesting that the hike may exacerbate the situation.
As Nigeria continues to grapple with electricity shortages, the gas price hike raises questions about the government’s strategy to address the underlying issues affecting the power sector.
With stakeholders expressing apprehension, attention now turns to how the government will navigate these challenges to ensure a reliable and affordable electricity supply for all Nigerians.
