The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is set to unveil a new Domestic Base Price (DBP) framework and applicable gas wholesale price for the strategic domestic sector.
Its Chief Executive Officer, Mr Farouk Ahmed, who disclosed this at the weekend, noted that the new framework was in fulfilment of the relevant sections of the Petroleum Industry Act (PIA) 2021.
The law, which was assented to by the President on the August 16, 2021 and gazetted on the August 27, 2021, provides a clear regulatory framework for the determination of a market-based pricing regime for the domestic gas market in Nigeria.
In line with Section 167 and Third and Fourth Schedule of the Act, which require the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to determine the Domestic Base Price (DBP), three months following the effective date of the Act.
Ahmed indicated that the applicable Wholesale Gas Price for the power sector shall be the established Domestic Gas Price. He hinted that the DBP would be determined annually based on the criteria set in the Third Schedule of the Act, which are: reference DBP to prices of gas in countries with significant reserves and production of natural gas; ensuring that Base Price considers the lowest cost of gas supply based on a Three-tier Cost of Supply Framework and DBP is related market-prices tied to international benchmarks (for strategic investors).
He said Domestic Base Price shall be the Export Parity Price at the delivery point where there is a dominant supply of gas in Nigeria.