A Review of the Nigerian Energy Industry

Govt to introduce new gas pricing framework soon


23 July 2014, Abuja – Strong indication has emerged that the Federal Government will, between and October, this year, implement a new gas pricing framework for the country to enable investors produce enough gas for the power sector.

The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, while speaking at the first Bayelsa State Investment and Economic Forum in Yenagoa, gave a new hope to the power industry after announcing that a new pricing structure for gas would soon emerge.

Even as some industry experts had noted that the power industry had continued to grapple with the realisation that there was a missing link in the government’s plan for gas to power, Alison-Madueke said that the new pricing structure would emerge within three or four months.

The Minister of Petroleum Resources, who pointed out that the Federal Government’s intention for the new Gas Pricing Framework was to ensure that the pricing for gas was made as competitive as possible, said: “We are working with the Nigeria Electricity Regulatory Commission (NERC), the Ministry of Power, and the Nigerian Petroleum Development Company (NPDC), in terms of trying to streamline what we are doing to bring gas to power in the very short and medium term.

“Central to all this will be the right pricing framework which will hopefully be firmly in place within the next four months or so,” she added.

According to her, the Federal Government was also working with a number of the multinationals, predominantly Shell, which had in its acreage the greatest volumes of Nigeria’s gas reserves, to ensure that unutilised volumes of gas reserves were made available to the various operators of the independent power plants that had come into play over the last 18 to 24 months.

While the power sector is getting attention, as something is finally being done to address the critical gas shortage, industry analysts stated that the Minister of Petroleum Resources must tread a fine line between keeping the prices high enough to encourage exploration and production companies to explore for and produce gas and at the same time not so expensive as to make the commodity too expensive for the gas-dependent independent power plants.

Many oil companies, information gathered revealed, had said that they would not produce more than they were required to under their domestic supply obligations unless the price for supplying the domestic gas market was attractive.


– Daily Newswatch

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