NNPC’s Proposed Hike In Gas Price May Increase Electricity Tariff

There may be a hike in Electricity tariffs across Nigeria as the Federal Government plans to increase the price of natural gas to $1.5 per 1,000 standard cubic feet. The Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mr Andrew Yakubu, said the move is aimed at encouraging increased gas supplies and sales to power plants.

The current situation is one whereby suppliers complain about the price of the resource which they find to be far from economic. When the price of natural gas is increased, it is expected that electricity tariffs may increase as power producers will look to recoup all they have spemt

Two years ago, the price for power producers, who account for about 80 per cent of the domestic gas consumption, was increased from $0.1 to $1.0 by the government for the same reason of encouraging suppliers to sell to power plants.

The price is however below the international market price for gas which stands at about $3 per 1,000 standard cubic feet.

Observers believe that the current price regime for gas may frustrate the efforts of the Federal Government to  stabilize power supply in the country.

The Minister of Power, Chinedu Nebo, believes the decision to increase the price of gas aims at establishing the right pricing regime as a necessary step to guarantee improved power supply in the country.

Professor Nebo believes the inconsistencies in price between gas supply to the power and industrial sector was one of the major reasons given by the now defunct Power Holding Company of Nigeria, PHCN, for gas supply to power plants being erratic which in turn made power supply erratic also