Page 4 - DMEA Week 42

DMEA COMMENTARY DMEA

Nigeria’s PIB envisions changes

in domestic gas sector

The proposed legislation, which is still under discussion in the National Assembly,

aims to make domestic gas sales a more lucrative proposition

NIGERIA EVEN as the month of October nears its end, provisions will not benefit all users equally.
Nigeria’s government has remained optimis- Instead, they will offer advantages to gas-fired
WHAT: tic about its chances of securing approval from thermal power plants (TPPs) and gas-based
The PIB raises the both houses of the National Assembly for the industrial consumers – namely, companies that
domestic base price Petroleum Industry Bill (PIB) before the end of use gas as feedstock for the production of petro-
for gas from current the year. chemicals, fertiliser, methanol and the like.
levels, but it also offers This optimism does not appear to be mis- This advantage is evident in the domestic
discounts to certain placed, as the proposed oil and gas law has not base price for gas sales, which is being raised
customers. lost momentum. The bill passed during its sec- from the current rate of $2.5 per million Btu to
ond reading in the Senate on October 20, and $3.2 per mmBtu as of January 1, 2021, Africa Oil
WHY: members of the House of Representatives began + Gas Report noted. It explained that this price
Officials in Abuja the second reading on the same day. floor would be applicable to TPPs, even as most
hope the new pricing Meanwhile, as the legislative process con- other consumers will have to pay at least $3.7
regime will attract tinues, more information about the PIB has per mmBtu, with the final cost of purchase to be
new investment to gas emerged. This essay will examine some of the negotiated with suppliers.
projects. details related to the gas sector that have come to Additionally, it said, gas-based industrial
light in recent days. consumers will be able to pay less than the floor
WHAT NEXT: price. Nigerian authorities will calculate rates for
The proposed changes New pricing regime these users in accordance with a special formula
require Nigeria’s Nigeria’s government has proclaimed 2020 the that may bring prices down to as little as $1.5 per
government to pull off a “Year of Gas” in a bid to promote the use of the mmBtu, it stated.
complicated balancing country’s abundant natural and associated gas The PIB also provides for raising domestic
act. resources. As such, it is hardly surprising that the base prices over time. It calls for increasing rates
legislation now under discussion contains mul- by $0.05 per mmBtu per year until the year 2037,
tiple provisions designed to promote domestic at which point the price floor will be fixed at $4
gas consumption. per mmBtu.
According to Africa Oil + Gas Report, these The legislation assigns responsibility for gas

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