Federal Govt Reviews Gas Tariff To Attract Investors In Midstream Business

The federal government is reviewing gas tariff in a move that will return investment in the gas sector, as the nation sustains energy in driving her Decade of Gas programme.

As Nigeria advances in that direction, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), is finalising domestic gas prices and tariffs in consultation with key stakeholders in line with the Petroleum Industry (PIA).

The chief executive officer (CEO) of NMDPRA, Mr. Farouk Ahmed, stated this in his presentation at the just concluded sixth Nigerian International Energy Summit (NIES) in Abuja, with the theme: ‘Global Perspectives for a Sustainable Energy Future.’

The Decade of Gas agenda is an ambitious programme of the federal government launched in 2021 by President Muhammadu Buhari and the immediate-past minister of State for Petroleum Resources, Chief Timipre Sylva to help Nigeria achieve industrialisation, economic prosperity and tackle energy poverty by using gas as an enabler.

The programme is to run from January 1, 2021 to December 31, 2030, and powered by the government in conjunction with a broad team of stakeholders from the Nigerian oil and gas industry and other linkage sectors.  

Ahmed said, NMDPRA was finalising domestic gas prices and tariffs in consultation with key stakeholders in line with the PIA and to boost investment in the gas sector, noting that this was part of the steps towards the realisation of the Decade of Gas plan.

Represented at the event by the executive director, Distribution System, Storage and Retailing Infrastructure, NMDPRA, Mr. Ogbugo Ukoha, Ahmed said, the use of natural gas as Nigeria’s transition fuel was one of the 21st Century’s strategic programmes of the federal government of Nigeria that was being implemented through the 2021 to 2035 Strategic Framework known as Decade of Gas.

He explained that the policy was tailored towards accelerated industrialisation of Nigeria, sustainable creation of wealths and jobs for investors and populace and optimal exploration and utilisation of the country’s abundant resources.

Other objectives of the Decade of Gas plan, according to him, were ensuring Nigeria’s energy security amid global energy supply and demand changes, enhancement of technology adaptation and development of key energy infrastructure, and achieving Nigeria’s commitment to netzero.

Ahmed maintained that the programme also aimed at diversification of Nigeria’s revenue sources from export of only crude oil as well as realising the overall economic development of the nation.

He stated that, “this programme was launched by the honorable Minister of State for Petroleum Resources in 2021 and it’s fully supported by the oil and gas industry and all necessary institutions of government.

“NMDPRA is committed to ensuring that the clear and compelling aspirations of the programme are fully actualised by providing leadership, authority resource, office space for the project team and all other requirements for successful execution of the programme.

“Success of the Decade of Gas, however, depends on the following: establishing right pricing and tariffs for gas molecules and services; availability of critical transportation and distribution infrastructure; sufficient domestic gas supply and delivery; robust and strategic utilisation infrastructure; payment securitization for deliverable molecules; payment of legacy gas debts; incentivising and de-risking critical investments.”

“We are making steady progress on all of the above. First, NMDPRA is finalising on gas prices and tariffs in consultation with stakeholders as required by the PIA. Secondly, NNPC and other investors are progressing on critical infrastructure,” he added.

Ahmed also informed that NMDPRA and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) were ensuring that all current and projected domestic gas demand was met, whether volumes, quality, prices and business rules through the instrument of the Domestic Gas Delivery Obligation (DGDO) and the National Gas Transportation Network Code (NGTNC).