The Executive Director of PowerUp Nigeria, Adetayo Adegbemle, has disclosed that the increase in the price of gas to power plants will affect electricity production, thereby increasing the cost of power generation, News About Nigeria reports.
He said this while reacting to the increase in gas by the federal government.
Yesterday, the Federal Government increased the wholesale price of gas to power plants by 11 percent from $2.18 per MMBTU to $2.42/MMBtu (million British thermal units), leaving power generation companies with additional costs.
The government announced this increase in a notice issued by the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Engr. Farouk Ahmed, and also raised the commercial wholesale gas price from $2.42/MMBtu to $2.92/MMBtu.
“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.
“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,” Ahmed said.
Reacting to this increase in price, Adegbemle noted that an increment in gas pricing would impact the cost of electricity production, stressing that the major fuel for power generation in the country is gas.
He maintained that the Minister of Power has a lot of work to do as the subsidy the Federal Government now has to cover has just increased.
He said that this would be burdensome unless the market is allowed to charge a full cost-reflective tariff.
He added that the subsidy on the electricity tariff is unsustainable and maintained that the Minister of Power was taking the easy path out of the problem when he insisted on the subsidy on the electricity tariff.
When he was proposing the idea of paying for gas in Naira, you will recall we called him out, even though the gas does not belong to the Federal Government. But now, we all need to face reality,” Adegbemle said.
