Oritsegbubemi Omatseyin
According to the Corporate Communications and Stakeholder Management Department of the NMDPRA, its authority in gas pricing aligns with the mandate outlined in the Petroleum Industry Act (PIA) 2021 which provides a clear regulatory framework for the determination of a market-based pricing regime 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 agency explained.
In addition, the NMDPRA also explained that the Domestic Base Price at the marketable gas delivery point under Section 167(1) and other provisions of PIA shall be determined based on regulations.
These regulations encompass various considerations, including principles such as ensuring the price encourages sufficient natural gas supplies for the domestic market voluntarily provided by the upstream; the price should not exceed the average of comparable natural gas prices in major emerging countries with significant natural gas production; the lowest cost of gas supply based on a three-tier cost of supply framework; and market-related prices tied to international benchmarks.
A statement by the regulator maintained: “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.
“In view of 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.”
The agency expressed gratitude to the investors in the domestic gas market sector and assured them of the NMDPRA’s commitment to ensuring transparency, deepening the domestic gas market, and creating an investor-friendly business environment, as it dutifully implements all the provisions of the new regulatory framework.