Nigeria Sets Two-Year Timeline for Liberalisation of Domestic Gas Prices

Nigeria plans to transition from regulated domestic gas prices to a market-driven pricing system within the next one to two years as investments in infrastructure and increased participation improve competition across the sector.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said the planned transition would allow gas prices to increasingly reflect negotiations between buyers and producers rather than prices administered by the government.

Chief Executive of the NMDPRA, Rabiu Umar, disclosed the timeline at the Nigeria Annual International Conference and Exhibition, saying the regulator is working toward an orderly migration to a willing buyer, willing seller framework.

The development provides greater clarity on the government’s long-term direction for domestic gas pricing as Nigeria seeks to attract investment, expand gas utilisation and develop a more competitive energy market.

Gas producers have pushed for greater pricing flexibility, arguing that commercially determined prices would encourage investment in production and infrastructure.

However, Nigeria’s domestic gas industry has continued to face infrastructure constraints, including inadequate pipeline capacity, transportation bottlenecks and limited connectivity between producers and potential customers.

These limitations have prevented the market from developing sufficient competition to support an immediate transition to fully commercial pricing.

Umar said improvements in infrastructure and increased participation by buyers and sellers would gradually create the conditions required for prices to be determined by market forces.

The planned reform is consistent with provisions of the Petroleum Industry Act (PIA), which provides the regulatory framework for Nigeria’s oil and gas industry.

Under the legislation, the regulator retains authority to determine domestic gas prices for designated strategic sectors, including electricity generation and some gas-dependent industries.

The framework, however, also provides a pathway toward a competitive market where commercial negotiations increasingly determine the price at which natural gas is supplied.

Moving toward a willing buyer, willing seller model could significantly reshape Nigeria’s domestic gas industry by giving producers and consumers greater flexibility to negotiate supply contracts based on prevailing market conditions.

For producers, a more commercially oriented pricing structure could strengthen incentives for investment in new gas fields, processing facilities and transportation infrastructure.

Additional investment in pipelines and distribution networks would also improve access to gas for power plants and industrial users that currently face supply constraints.

The reform comes as Nigeria seeks to increase the role of natural gas in electricity generation, industrial development and its broader energy transition strategy.

Successful implementation will largely depend on how quickly the country expands critical infrastructure and creates sufficient competition among producers and buyers.

NMDPRA expects these improvements to provide the foundation for a more liberalised domestic gas market over the next two years, reducing direct regulatory intervention in pricing while allowing commercial forces to play a greater role in determining the value of natural gas.