Nigeria’s energy regulator has introduced a standardized pricing structure aimed at streamlining the country’s natural gas transportation network. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) announced an interim tariff of $1.13 per thousand standard cubic feet (Mscf) for gas transported via infrastructure operated by the state-owned NNPC Gas Infrastructure Company Limited (NGIC). The rate, effective from July 1, 2023, through December 31, 2025, will apply uniformly across six major gas pipeline systems nationwide.
In a Monday statement, the NMDPRA said the fixed fee seeks to bolster the economic sustainability of Nigeria’s gas pipelines while mitigating financial risks for operators. A key feature includes flexibility in payment currency to avoid disruptions caused by exchange rate fluctuations, addressing concerns over currency mismatches in debt and operational costs. The interim measure, described as a transitional arrangement, precedes formal consultations with stakeholders to finalize long-term tariff methodologies.
The authority emphasized compliance with sections 122 and 123 of Nigeria’s 2021 Petroleum Industry Act (PIA) and the Natural Gas Pipeline Tariff Regulations 2023. The flat rate, determined using the “postage stamp” model, ensures gas transporters pay the same fee regardless of distance or location—a departure from distance-based or zonal pricing. This approach aims to simplify billing and encourage broader utilization of pipeline networks, which span critical economic corridors.
Approval followed a “rigorous” review of market dynamics, balancing investor returns with affordability for end-users, the NMDPRA noted. Analysts suggest the move aligns with Nigeria’s push to expand gas-based industrialization and domestic energy access, though its impact on consumer prices remains monitored.
Covered pipelines include the Escravos–Lagos Pipeline System (ELPS I and II), Oben–Ajaokuta, Oben–Geregu, Obiafu–Obrikum–Oben (OB3), the Eastern Network, and the under-construction Ajaokuta–Kaduna–Kano (AKK) Pipeline. The AKK project, a flagship initiative, is expected to boost gas supply to northern regions and support power generation and industrial growth.
The regulator urged gas operators and stakeholders to adhere to the interim tariff, underscoring its role in stabilizing infrastructure investments. Nigeria, Africa’s largest gas reserves holder, has prioritized gas development as a transition fuel amid global energy shifts. However, challenges such as pipeline vandalism and financing gaps persist, highlighting the need for policies that attract private-sector participation.
The NMDPRA’s decision underscores efforts to create a predictable regulatory environment, critical for unlocking Nigeria’s gas potential and meeting domestic and regional energy demands.
