Minister of Petroleum Resources, Mrs. Deziani Alison-Madueke said last week that President Goodluck Jonathan has approved the implementation of a new gas-to-power price in the domestic market as part of current efforts of the Federal Government to encourage more production of gas for electricity generation in the country.
Addressing the media in Abuja during a press conference, the minister disclosed that under the approved price regime, the price of gas will increase progressively from its current 20 cents per million British thermal unit (mmbtu) to $1/mmbtu by the end of 2010 and $2/mmbtu by the end of 2013.
According to her, the old price regime of 20 cents per mmbtu could not support the needed investment required by gas suppliers to meet domestic demand.
Shipping Position Weekly recalls that the International Oil Companies (IOCs) have always complained that the domestic price is very low, hence their inability to supply gas to the various power plants in the country and the preference for export as liquefied gas.
She also acknowledged that the price of gas is crucial in the sustainability of the product, adding that a new price regime which was proposed last year, which sought a steady migration of gas-to-power price to $1/mmbtu by the end of 2012, was not implemented in any of the Gas Sales Purchase Agreements (GSPAs).
These companies also supply gas to the Nigerian Gas Company (NGC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) for domestic use.
According to her: “To grow supply significantly, brand new supply sources are required and the investment required for such is more significant hence the need for a new pricing. In view of the above, I have secured Mr. President’s approval for the immediate implementation of a new gas-to-power price in the domestic market.
"This new pricing arrangement
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