Nigerians to Pay More For Electricity as FG Increases Gas Price For GenCos
- Nigeria's gas price hike could lead to higher electricity tariffs for consumers following the surge in crude prices
- NMDPRA has adjusted natural gas pricing amid the power sector debt crisis ravaging the country
- Experts say the rising costs threaten the sustainability of Nigeria's fragile electricity supply chain
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s electricity sector may be heading for another round of price pressure after the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) announced an increase in the price of natural gas supplied to power generation companies (GenCos).
In a new circular, the regulator raised the domestic base price (DBP) of gas to $2.18 per metric million British thermal units (MMBTU), up from the previous $2.13/MMBTU.
Source: Getty Images
The revised pricing takes effect from April 1, 2026, and is expected to ripple across the country’s already fragile electricity value chain.
The DBP represents the minimum price at which natural gas can be sold in Nigeria’s domestic market, particularly to critical sectors such as power generation.
New pricing structure across sectors
Beyond power generation companies, the new pricing template also affects other categories of gas users.
Commercial consumers will now pay $2.68/MMBTU, slightly higher than the previous $2.63/MMBTU. ,
Meanwhile, gas-based industries—including ammonia, urea, methanol, and low sulphur diesel producers—will operate within a pricing band of $0.90/MMBTU (floor price) and $2.18/MMBTU (ceiling price).
The NMDPRA, led by its chief executive officer, Saidu Mohammed, said the adjustment reflects current market realities and aligns with provisions of the Petroleum Industry Act (PIA), as well as existing gas pricing regulations, according to a report by TheCable.
Why did the government increase gas prices?
According to the regulator, the revised pricing framework is designed to strike a balance between incentivising gas producers and protecting domestic consumers.
The agency explained that the price must be sufficient to encourage upstream oil and gas producers to supply the domestic market voluntarily, while also remaining competitive when compared with gas prices in other emerging economies.
Other considerations include ensuring the lowest possible cost of supply under Nigeria’s three-tier pricing framework, as well as maintaining alignment with international gas pricing benchmarks.
In essence, the government is attempting to solve a long-standing problem: inadequate gas supply to power plants due to unattractive pricing for producers.
Mounting debt threatens the power supply
However, the price increase comes at a time when Nigeria’s power sector is grappling with a deep financial crisis.
The Association of Power Generation Companies (APGC) recently raised concerns that gas suppliers may halt deliveries to thermal power plants over an estimated ₦3.3 trillion debt owed by GenCos.
Adding to the strain, the Federal Government itself is reportedly indebted to GenCos to the tune of ₦6.5 trillion, further weakening the sector’s liquidity and operational capacity.
Industry stakeholders warn that unless these debts are resolved, higher gas prices could worsen the situation by increasing the cost burden on already struggling power producers.
What this means for Nigerians
For millions of Nigerians, the development could translate into higher electricity tariffs or worsening power supply.
Since most of Nigeria’s electricity is generated from gas-fired plants, any increase in gas costs directly impacts the cost of power generation.
In a market where cost-reflective tariffs remain a contentious issue, distribution companies may eventually push for tariff adjustments to cover rising expenses.
Source: Getty Images
With households and businesses already battling inflation and high energy costs, the latest move raises fresh concerns about affordability and economic pressure.
As the new pricing regime takes effect, attention will now shift to how regulators, power companies, and the government manage the delicate balance between sustainability and consumer protection.
Rising crude prices: Nigerian refineries exposed
Legit.ng earlier reported that Energy expert and National Publicity Secretary of the Crude Oil Refineries Association of Nigeria (CORAN), Eche Idoko, has explained that the reliance of local refineries on foreign crude supplies is responsible for the recent hike in petrol prices.
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Idoko said that Nigeria’s local refineries that depend on imported crude oil are facing mounting cost pressures as global prices rise amid tensions in the Middle East due to the war between Iran and US-backed Israel.
He stressed that domestic refineries are vulnerable to international market volatility, an abnormal situation for an oil-producing country.
Source: Legit.ng
