Electricity tariffs in the country
are set to rise as the Federal Government announces an increase in the domestic
price of natural gas to $1.5 per 1,000 standard cubic feet.
The increase will represent a 50 per
cent increase in the current $1 price for gas to power plants.
The Group Managing Director of the
Nigerian National Petroleum Corporation (NNPC), Mr. Andrew Yakubu, disclosed in
Abuja that the move would ensure efficient supply of abundant natural gas to
thermal power stations nationwide.
Currently, fertilizer companies pay
90 cents for 1,000 cubic feet of gas while industrial users purchase 1,000
cubic feet of the product at above $2.50.
The price for power producers, who
account for about 80 per cent of the domestic gas consumption, was increased
about two years ago from $0.1 to $1.0 by the government for the same purpose of
encouraging suppliers to sell to power plants.
These prices are, however, below the
international market price for gas, which is about $3 per 1,000 standard cubic
feet.
There have been strong concerns that
inappropriate pricing for gas as seen with the existing price regime might
frustrate the Federal Government’s efforts at stabilizing power supply in the
country and the power companies would increase tariffs to recoup the costs that
would accrue from the hiked gas price.
The Minister of Power, Professor
Chinedu Nebo, also indicated the move to raise the price when he
stated that appropriate pricing of gas was a necessary factor that would
guarantee improved power supply in the country.
Nebo, who spoke of the disparity in
price between gas supply to the power industry and the industrial sector, also
cited the inability of the defunct Power Holding Company of Nigeria, PHCN,
to promptly meet its financial obligations to gas suppliers as a major reason
why gas supply to power plants had been erratic, negatively affecting power
supply nationwide. – Vanguard.
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