New pricing by regulator takes effect April 2026, with potential ripple effects on electricity generation and already strained GenCos…..
Nigeria’s energy regulator has approved a fresh increase in the price of natural gas supplied to power generation companies, a move that could further strain the country’s electricity sector.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) announced that the domestic base price of gas has been raised to $2.18 per metric million British thermal units (MMBTU), up from $2.13.
The adjustment, outlined in a circular issued Tuesday and signed by the agency’s chief executive, Saidu Mohammed, will take effect from April 1, 2026.
The domestic base price represents the minimum rate at which natural gas can be sold within Nigeria’s local market and serves as a benchmark for transactions across key sectors, particularly power generation.
Under the revised framework, commercial users will now pay $2.68 per MMBTU, compared to the previous $2.63. Meanwhile, gas-based industries including ammonia, urea, methanol, and low sulphur diesel producers will operate within a price band ranging from a floor of $0.90 to a ceiling of $2.18 per MMBTU.
The NMDPRA said the new pricing structure was determined in line with provisions of the Petroleum Industry Act (PIA), as well as prevailing market conditions and existing gas pricing regulations.
According to the agency, the pricing model is designed to strike a balance between encouraging sufficient gas supply to the domestic market and maintaining competitiveness with other major gas-producing emerging economies.
It also emphasised that the pricing must reflect the lowest cost of supply while remaining aligned with international benchmarks.
However, the increase comes at a delicate time for Nigeria’s power sector, which is grappling with mounting financial pressures.
Power generation companies, known as GenCos, are currently weighed down by significant debt burdens. Industry officials have warned that gas suppliers could halt deliveries to thermal power plants over unpaid obligations estimated at N3.3 trillion.
In addition, the federal government is said to owe generation companies about N6.5 trillion, further complicating liquidity across the electricity value chain.
With gas serving as the primary fuel for most of Nigeria’s thermal power plants, any disruption in supply or increase in cost could directly impact electricity generation and worsen power shortages.
The latest price adjustment is therefore expected to intensify concerns among operators, as the sector continues to navigate a mix of rising costs, debt overhang, and operational uncertainties.
As the new pricing takes effect, attention will turn to how both gas suppliers and power producers respond and whether the government can stabilise a sector critical to the country’s economic growth.
