08 April 2014, Abuja – The federal government is hoping that ongoing reforms in Nigeria’s power sector will push for swift uniformity in the export and domestic prices of natural gas produced in Nigeria by the year 2016 and 2019.
Chairman of the Presidential Task Force on Power (PTFP), Beks Dagogo-Jack stated that attaining price parity in domestic and export demand for gas was part of the objectives of the country’s power sector reform policy instrument.
According to Dagogo-Jack, gradual attainment of efficiency in the generation subsector of the country’s electricity market, along with improvement in revenue collection by the distribution networks will with time give gas producers the needed confidence to allocate greater volumes of gas to the domestic market, which is dominated by the electricity industry.
“That is what the reform established, and that is, we should get to export price parity by 2016-19, which means whatever price these people are paying to get the gas taken outside, we are ready to pay to get it domestically,” Dagogo-Jack said.
Currently, export price for natural gas hovers around $4.45 per thousand standard cubic feet depending on the location, while the price for gas supplied to power plants in is about $1.50 with the possibility of an upward review soon.
Dagogo-Jack said: “We can get something better but anywhere in the world, the price of industry gas has never been the same with electricity because electricity is utility that serves a wide range of social customer targets but industries connect with a higher level of demand.”
He added: “It is only people that are buoyant that can pay commercially for gas produced and that is why the alternative for the industries is diesel but it is commercially viable for them to stay with gas. If you now say that we should meet with the industry price for gas in the electricity sector, we cannot except marching up with the export price and when we do that, you will see a different kind of gas market because people will sign-on to contract for gas whose market is based on off-taker.”
The PTFP Chair further stated that the gas-to-power grid design would tidy up because government has sold the upstream assets to private people who would want to generate more power by creating efficiencies around their work.
Group Managing Director of the Nigerian National Petroleum Corporation, (NNPC), Andrew Yakubu recently disclosed that the existing gas infrastructure component of the country’s gas master plan was designed to increase domestic gas consumption by three fold; from 1.7 billion cubic feet (bcf) per day to 5.4 bcf per day by 2019.
– Chineme Okafor, This Day