The Federal Government has reduced the price of natural gas for power generation companies in a move aimed at easing the financial pressure on the electricity sector and preventing potential shutdowns across the value chain.
According to a new pricing framework released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, power plants will now pay $2.13 per million British thermal units, down from the previous $2.42 per MMBtu.
The new price which took effect from April 1 2025 is expected to bring some relief to power generation companies struggling with a liquidity crisis estimated at N4.7 trillion.
The gas price adjustment follows months of discussions between industry regulators and stakeholders as debt owed to gas suppliers by GenCos approached N2 trillion.
The Nigerian Gas Association and the Association of Power Generation Companies have repeatedly warned that the liquidity gap could lead to supply disruptions and forced shutdowns of gas-fired plants which account for over 70 percent of Nigeria’s power generation capacity.
In a document titled Announcement on Establishment of the Year 2025 Domestic Base Price and Applicable Wholesale Price of Natural Gas for the Strategic Sectors the NMDPRA said the revised price was determined based on provisions in the Petroleum Industry Act and in consultation with relevant market participants.
It noted that the pricing benchmark was set in line with global emerging market trends to ensure competitiveness and affordability.
The agency also fixed the base price for the commercial sector at $2.63 per MMBtu while reaffirming its commitment to developing a transparent and responsive domestic gas pricing structure.
The President of the Nigerian Gas Association, Akachukwu Nwokedi, described the move as a strategic intervention that could help unlock more domestic supply and drive industrial gas utilisation.
He stressed the importance of regulatory consistency and pricing clarity in attracting new investments into the midstream and downstream segments of the industry.
On the electricity side, the CEO of the Association of Power Generation Companies, Dr Joy Ogaji, reiterated that GenCos remain in dire need of urgent financial support.
She noted that many plants are currently operating below capacity due to gas constraints and outstanding debts to fuel suppliers.
According to Ogaji, the liquidity shortfall continues to undermine power availability and investment across the sector.
Minister of Power Adebayo Adelabu has assured Nigerians that the federal government is actively addressing the issue and will not allow any generation company to shut down due to unpaid liabilities.
He confirmed that President Bola Tinubu has directed relevant agencies to fast-track payments to players across the value chain and clear legacy debts owed to gas suppliers and generation companies.
Adelabu said the government remains committed to ensuring uninterrupted electricity supply and improving sector efficiency through targeted reforms, investment in infrastructure and policy-driven interventions.
He also acknowledged the role of international development partners in supporting efforts to strengthen the sector.
The revised gas pricing framework comes months after reports indicated that some gas companies were planning to halt supply due to non-payment.
The intervention is expected to stabilise power output, improve reliability and support ongoing efforts to attract private sector investment into Nigeria’s gas-to-power value chain.
As the country continues to implement the Electricity Act and drive grid expansion through renewable and off-grid solutions, stakeholders have emphasized the need for continuous engagement, policy clarity and financial restructuring to ensure long-term sector viability.
