The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) says Nigeria will stop regulating prices in the domestic gas market by September 2028, targeting a transition to a fully established willing-buyer, willing-seller framework.
Rabiu Umar, chief executive officer (CEO) of NMDPRA,
disclosed the plan on Thursday at the gas market maturity workshop organised
under the decade of gas initiative at the petroleum technology development fund
(PTDF) in Abuja.
“The journey we are starting should lead us to a place where
we should target a 24-month, at best, period within which we will be able to
declare the market to be truly a willing buyer, willing seller market,” Umar
said.
The NMDPRA chief said “gas must be affordable for Nigerians
while supporting President Ahmed Tinubu’s investment reforms”.
He said the transition to a fully established willing-buyer,
willing-seller framework by 2028 “is in line with the Nigeria decade of gas
goal to become a gas-powered economy by 2030”.
The NMDPRA chief said the transition would be based on
measurable conditions demonstrating the maturity of different segments of the
gas market, in line with the provisions of the Petroleum Industry Act (PIA).
“Invariably, this is [the] first time that we have been bold
enough to set a clear target for our gas market transition,” he said.
Umar said the PIA envisages a shift from a market largely
coordinated through regulation to one increasingly driven by commercial
contracts between willing buyers and willing sellers.
He said section 167 of the regulation provides for the
gradual movement of the domestic gas market towards a point where price
regulation can step back as commercial contracting and competition become
stronger.
MARKET MATURITY INDICATORS
The NMDPRA chief said the transition must not be based on
broad statements of intent but on clearly defined indicators, thresholds, and
safeguards.
He identified supply availability and diversity, the number
and quality of buyers and sellers, access to transportation infrastructure,
strength of contracts, payment reliability, delivery obligations, market
information and credible price signals as key indicators of market maturity.
Umar said Nigeria’s domestic gas supply remains tight
despite the country’s vast gas resources, stressing that infrastructure
development must be matched by sufficient gas molecules to utilise the
infrastructure.
He also stressed the need to ensure that major gas
infrastructure projects, including the Ajaokuta-Kaduna-Kano (AKK) pipeline,
have sufficient gas supply to make them commercially useful.
“The focus right now is not just delivering the
infrastructure, but ensuring that we have enough molecules to fill the
pipeline,” Umar added.
The NMDPRA chief said the role of the regulator would also
evolve as the market develops, with greater emphasis on establishing market
rules, ensuring fair access, protecting competition, and monitoring market
conduct.
He said sequencing the transition would require determining
which market segments were ready to move first, the thresholds they must meet,
and the safeguards required before liberalisation.
Umar further said the authority is close to the conclusion
of the process for issuing gas distribution licences, with the exercise
expected to be completed in the coming weeks.
He said qualified companies would be issued gas distribution
licences in the fourth quarter (Q4) of 2026.
In March, the NMDPRA increased the price of natural gas for
power generation companies (GenCos) to $2.18 per metric million British thermal
units (MMBTU).
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