Nigerians To SUFFER MORE As FG Makes Decision That Will Bring Serious Hardship, See What It Is
The Federal Government’ s decision to increase the wholesale price of gas to power plants by 11% has sparked concerns and raised additional challenges for power generation companies already grappling with an energy crisis.
This move, which raises the price from $2. 18 to $2. 42 per MMBTU (Million British Thermal Unit), imposes a heavier financial burden on power generation companies.
The backdrop of unpaid invoices totaling over $1. 2 billion since January has strained the relationship between gas companies and power plants, leading to reduced supply and subsequent power shortages.
Although the government intervened by paying $120 million to the companies last month, the energy sector continues to face significant hurdles.
Nigerians To SUFFER MORE As FG Makes Decision That Will Bring Serious Hardship, See What It Is| image 6
The notice issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) also increased the commercial wholesale gas price from $2. 42/MMBtu to $2. 92/MMBtu, citing provisions in the Petroleum Industry Act, 2021.
This decision aims to establish a domestic base price and applicable wholesale price of natural gas for the strategic sector, as mandated by the Act.
The hike in gas prices has drawn criticism from industry experts, who warn of its adverse effects on the cost of electricity production.
Adetayo Adegbemle, Executive Director of PowerUp Nigeria, emphasized that gas constitutes a significant fuel source for power generation and that any increase in its price will inevitably impact production costs.
He called attention to the challenges faced by the Power Minister in navigating the complexities of energy subsidies and tariff structures amidst mounting pressures in the sector.
The decision to increase gas prices underscores the urgent need for sustainable solutions to address the underlying issues in the energy sector.
It highlights the delicate balance between ensuring fair compensation for stakeholders while mitigating the impact on consumers and the economy.
As stakeholders grapple with these challenges, there is a pressing need for collaborative efforts to stabilize the energy market and ensure reliable power supply for the nation.