The umbrella body of the 11 electricity distribution companies (DisCos), Association of Nigerian Electricity Distributors (ANED) has called for Federal Government’s (FG) intervention on gas pricing for power generation companies (GenCos).
It said this is one of the key determinants of electricity tariff in Nigeria especially when 80 percent of the country’s energy mix is thermal. ANED’s Executive Director, Research and Advocacy, Mr. Sunday Oduntan in a statement at the weekend explained that since the thermal plants were gas-fired, there was a need for a downward review of the price.
“Most of Nigeria’s power generating plants are thermal plants. They use gas as their fuel and as long as the price of gas is high, the cost of generation – and the eventual tariff to the end-user will also be high,” he said.
He said while gas price is being affected by foreign exchange, “tariff is fixed in Naira and may not account for this difference especially because of the absence of a commitment to adhering to periodic tariff reviews.
“As we all know, today, the price of gas for local power production is a little over three dollars for one million British Thermal Units (mmbtu). Meanwhile, in this same country, the cost at which LNG exports gas is less than half the same amount.
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“If you also consider that some of these IOCs are still flaring this much-needed gas into the atmosphere, you will realise that there are many options available to the government to intervene through in the quest to make electricity more affordable.”
He further noted that unless the country addresses gas pricing issues, it may not be able to provide the desired cheap electricity to Nigerians.
“If the cost of the major input in any production process is reduced, it will have a ripple effect across the entire chain. That is what we are advocating for. It will be in the interest of the end-users and by implication, the Nigerian economy as a whole,” Oduntan added.
Meanwhile, the FG had last week, inaugurated the committee on gas pricing charged with evaluating and reviewing gas prices in the country. The Minister of State for Petroleum, Timipre Sylva said members will review domestic gas price and benchmark, make recommendations for an appropriate gas price for the respective gas sectors, make evaluations, technical suggestions with a turnaround time of thirty days.
While stressing the need for an appropriate price system that would greatly benefit the manufacturing industry, he said there is a need to ensure its affordability.
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