The Minister of State for Petroleum Resources, Timipre Sylva (the “Minister”), has outlined plans to review the prices of gas consumed across the country. The Minister explained that the move would help deepen the use of Liquefied Petroleum Gas and Compressed Natural Gas nationwide.
The Minister disclosed the plan to review the country’s domestic gas pricing framework at the inauguration of a committee established to evaluate and review gas prices nationwide in order to align with the current economic realities.
The Minister stated that the terms of reference of the committee shall include: the review of domestic gas prices and benchmarks; providing recommendations for appropriate gas price for the respective gas sub-sectors; and proffering technical suggestions for the pricing framework of the domestic gas sector. The committee has been given thirty days to submit its report.
Nigeria has aptly been described as ‘a gas province with a little oil’, yet for too long, Nigeria’s gas resources have been neglected in favour of crude oil. The Nigerian Government did initiate a number of programs including the Nigerian Gas Master Plan (“NGMP”) in 2008 as part of its resolve to enhance gas infrastructure expansion in-country and diversify its crude oil production portfolio in the hopes of becoming a major player in the international gas market. Unfortunately, the NGMP has thus far failed to reach its full potential. Nigeria’s gas market remains largely export based because the price of gas in the domestic market is less attractive to gas-producers than the prices obtained in the international market.
Given the urgent need to diversify the national revenue base and the untapped potential of gas-to-power energy solutions to address the undersupplied domestic power market it is hoped that the review of gas prices will result in a move towards willing buyer/willing seller market indices to bolster the domestic gas market and encourage investment.
We will continue to monitor developments as they relate to the review of domestic gas prices and will bring you more information as it becomes available.
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