The Federal Government has reduced the price of natural gas supplied to power generation companies in a move to ease the financial burden affecting the electricity sector. This new pricing adjustment comes amid a heavy debt of about ₦4.7 trillion owed by power generation companies (GenCos) to gas suppliers.
According to a document released by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), GenCos will now pay $2.13 per million British thermal units (MMBTU), down from the previous rate of $2.42 per MMBTU introduced in 2024.
The new gas price took effect from April 1, 2025, and is aimed at helping the GenCos, many of whom are struggling to stay afloat due to cash flow issues. Over 70 per cent of power plants in Nigeria are gas-fired, meaning they need a steady supply of natural gas to keep the lights on.
Last year, the gas price for the power sector had been increased by 11 per cent, which many experts say worsened the liquidity crisis facing the GenCos. As a result, many gas companies threatened to stop supplying fuel due to unpaid debts running into trillions of naira.
In a document signed by the Chief Executive of NMDPRA, Farouk Ahmed, the regulatory agency explained that it followed the Petroleum Industry Act (PIA) guidelines while setting the new Domestic Base Price (DBP) and wholesale price for the sector. The PIA requires that Nigeria’s domestic gas prices should not be higher than what is obtainable in similar emerging gas-producing nations.
Farouk Ahmed stated, “After due consultation with stakeholders and considering market realities, the new Domestic Base Price is now set at $2.13 per MMBTU for the power sector, and $2.63 for the commercial sector.”
President of the Nigerian Gas Association, Mr. Akachukwu Nwokedi, welcomed the move. He praised both the NMDPRA and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for helping to commercialise gas and introducing clear domestic pricing. He noted that if properly implemented, this step could increase supply to local industries and help stimulate economic activity.
Meanwhile, the CEO of the Association of Power Generation Companies, Dr. Joy Ogaji, said GenCos are currently overwhelmed by a massive liquidity crisis estimated at ₦4.7 trillion. She explained that the slash in gas prices was a necessary step, but more needs to be done to save power producers from shutting down.
“GenCos are suffering seriously. We need quick and realistic solutions to the liquidity crisis. It’s not just about gas pricing, we need payments to flow across the value chain,” Ogaji said.
In December 2024, the Federal Government had to step in after gas companies threatened to cut off supply due to unpaid debts of around ₦2.7 trillion. Such a move would have thrown the entire country into darkness as gas is the main fuel for Nigeria’s electricity generation.
Minister of Power, Adebayo Adelabu, through his media aide, Bolaji Tunji, said the government was taking the issue seriously. He assured Nigerians that power plants would not be allowed to shut down.
“We are always intervening. The minister has made a case for the outstanding and legacy debts to be paid. We won’t allow the GenCos to stop generating electricity,” he said.
While the new gas pricing policy brings some relief, experts say it is only one part of the solution. Many are calling for a complete overhaul of the electricity sector’s financial structure to ensure stability and uninterrupted power supply for Nigerians.
