Nigeria’s Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has raised the price of natural gas sold to power generation companies by five cents, a modest adjustment that nonetheless lands on an electricity sector already strained by billions of dollars in accumulated debt.
The NMDPRA said in a circular on Tuesday that the new domestic base price, the minimum at which natural gas can change hands in the local market, will rise to $2.18 per metric million British thermal units from $2.13, effective April 1, 2026.
“Taking into cognisance the provisions of the PIA, market realities, as well as the gazetted Gas Pricing and Domestic Demand Regulations,” the authority said in the circular, signed by Saidu Mohammed, chief executive officer.
Commercial users will face a steeper bill, paying $2.68 per MMBtu under the new schedule, up from $2.63. Gas-based industries, including producers of ammonia, urea, methanol, and low-sulphur diesel, will operate within a price band, with a floor of $0.90 per MMBtu and a ceiling set at the new domestic base price of $2.18.
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The NMDPRA said pricing decisions are guided by principles established under Section 167(1) of the Petroleum Industry Act, including ensuring that prices are sufficient to attract voluntary gas supplies from upstream producers, remain competitive with benchmark rates in major emerging market gas-producing nations, and reflect the lowest cost of supply under a three-tier framework tied to international benchmarks.
The incremental nature of the increase reflects a delicate balancing act for Abuja. Nigerian power generation companies have long operated under financial distress, hamstrung by a combination of unpaid electricity bills, foreign-exchange shortfalls, and gas supply constraints that have kept the national grid chronically underperforming relative to demand.
Raising gas prices too aggressively risks deepening the sector’s debt crisis and pushing generation costs higher at a time when electricity tariffs remain politically sensitive. Yet pricing gas too cheaply undermines the commercial incentives needed to unlock fresh upstream investment and expand domestic supply, a tension the PIA was partly designed to resolve.
Nigeria’s electricity grid has for years struggled to deliver reliable power to households and businesses, with generation frequently falling well below installed capacity. Gas unavailability, caused in part by underpriced supply agreements that discourage producers from prioritising the domestic market, has been a persistent drag on output.
The new pricing framework is set against a broader reform effort by President Bola Tinubu’s administration to rationalise fuel and energy subsidies and attract private capital into the power sector.
Whether a five-cent adjustment moves the needle meaningfully remains to be seen. Industry observers have previously argued that sustainable reform requires more structural fixes, including resolving the sector’s legacy debt and improving payment discipline across the electricity value chain, before incremental price signals can translate into real capacity gains.