NMDPRA Keeps Natural Gas Prices Unchanged for the Domestic Market
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has announced its decision to uphold the current Domestic Base Price (DBP) and pertinent wholesale gas prices for essential domestic sectors of the Nigerian economy.
This decision, by the Petroleum Industry Act (PIA) of 2021, falls under the authority’s jurisdiction in gas pricing, as outlined by its Corporate Communications and Stakeholder Management Department. The PIA serves as the foundation for a transparent regulatory framework aimed at establishing a market-based pricing system for the domestic gas market in Nigeria.
“In line with Section 167, the Third and Fourth Schedule of the Act, the NMDPRA is obligated to determine the Domestic Base Price and the marketable wholesale price of natural gas supplied to the strategic sectors of the Nigerian gas sector,” the regulator said.
Furthermore, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has provided clarification that the assessment of the Domestic Base Price at the marketable gas delivery point, as specified in section 167(1) and other relevant provisions of the Petroleum Industry Act (PIA), will be carried out by established regulations.
These regulations encompass a range of considerations, incorporating principles that aim to achieve several objectives. These include ensuring that the price encourages an ample supply of natural gas for the domestic market, voluntarily provided by the upstream sector.
Additionally, the regulations stipulate that the price should not surpass the average of comparable natural gas prices in major emerging countries with substantial natural gas production. The determination of the price is also guided by the lowest cost of gas supply, based on a three-tier cost of supply framework. Moreover, market-related prices are tied to international benchmarks to ensure alignment with global standards.
“Accordingly, the NMDPRA implemented the following towards the establishment of the DBP and applicable price for gas-based Industries: a) Conducted stakeholder engagement for review and establishment of the Gas Pricing and domestic demand regulations.
b) Approved and Gazetted the Gas pricing and domestic demand regulations. c) Established DBP in line with provisions of the PIA. d) Established applicable prices for gas-based industries. e) Collation and analysis of strategic stakeholder consultations on the DBP and applicable prices of natural gas, for the emplacement of a fair market-based pricing regime for the strategic sector.
“Given the above, the NMDPRA hereby notifies all stakeholders, that while wider consultations and necessary efforts are being expedited towards emplacing the PIA prescribed strategic sector pricing framework, the extant price regime applicable to the domestic strategic sector, still applies,” a statement by the regulator maintained.
