The pricing of gas utilized by Generation Companies (GenCos) in US dollars has come under scrutiny by the Minister of Power, Adebayo Adelabu. Speaking at a ministerial retreat in Abuja, Adelabu highlighted the adverse impact of denominating gas prices in foreign currency on the cost of electricity for end-users, owing to foreign exchange volatility.
Adelabu emphasized the need for gas pricing to be conducted in Naira, aligning it with the Multi-Year Tariff Order (MYTO) methodology to mitigate the effects of foreign exchange fluctuations. He stressed that trading gas in Naira would better manage inflationary trends associated with foreign currency, ultimately ensuring the faithful application of the MYTO methodology.
This development follows a recent warning from GenCos, who expressed concerns about their ability to sustain current electricity supply levels. This concern arose after the Nigerian Bulk Electricity Trading Plc settled only 28.3 percent of the power supply invoice in the September payment cycle.
Adelabu’s call for Naira-denominated gas pricing seeks to address the challenges posed by volatile foreign exchange rates and their impact on electricity costs. This move aims to bring stability to the electricity sector, safeguarding the interests of both GenCos and end-users.
The Minister’s proposition reflects a concerted effort to tackle the complexities of energy pricing and currency volatility, underscoring the importance of aligning gas pricing with domestic currency for a more sustainable and predictable electricity pricing framework.
With this proactive stance, the Minister of Power signals a commitment to steering the energy sector towards greater stability, paving the way for a more reliable and economically sound electricity supply for the nation.
By advocating for Naira-denominated gas pricing, Minister Adelabu champions a strategic shift towards mitigating the impact of external factors on electricity costs, setting the stage for a more secure and sustainable energy landscape in Nigeria.
