Nigeria Content Online

The federal
government yesterday announced a new price regime for gas in the
domestic market to stimulate investments and boost gas supply to the
power sector and industries.

This forms part of
a two-point agenda contained in the Nigerian Gas Master plan which the
federal government hopes will position Nigeria competitively in the
global gas export market and secure the final investment decision for
Brass LNG by the end of the year.

The minister of
Petroleum Resources, Diezani Alison-Madueke, said the new arrangement
has received the support of President Goodluck Jonathan who has
directed for its immediate implementation. She also said that the
operators in the oil and gas industry have been very receptive of the
development.

Mrs Alison-Madueke
who gave some details of the new pricing regime said the price of
gas-to-power will grow from the current level of two cents per million
British thermal units (Btu) to $1.50 per million Btu by end of 2011,
and $2 per a million Btu by the end of 2013, while any increment beyond
2014 would be by inflation.

The British thermal
unit or Btu is a traditional unit of energy equal to about 1.06
kilojoules, used in the power, steam generation, heating and air
conditioning industries.

Pointing out that
the new pricing regime would be capped by export parity, Mrs
Alison-Madueke maintained that at no time would the Power Holding
Company of Nigeria (PHCN) be made to pay more than the price export
projects are paying for gas.

“In essence, should
export prices (on a netback basis) fall below the new prices structure
above, the lower of the two would be paid by the power sector,” she
explained, adding that the price review would be attached to growth in
gas supply.

Contractual agreements

On contractual
agreements, the minister said the government has commenced an elaborate
and comprehensive development of gas supply and purchase agreements, as
well as gas transmission agreements for the nation’s domestic market.
Besides, she said the template agreements that would move the country’s
process of gas supply and purchase to the global level have been
finalised, while negotiations are on ongoing between the PHCN and the
supplier companies to resolve all discrepancies. “I expect that within
the next four-six weeks, government would be in a position to execute
these landmark agreements between the power sector and the gas
suppliers as a demonstration of the steady progress being made in the
development of the sector,” she said.

On current gas supply to the power sector, the minister announced
that all critical pipeline repairs that affected the smooth performance
of the industry last year have been completed, while all the country’s
gas plants are currently operating close to full capacity.