Electricity tariff hike looms as gas prices rise

Electricity generation companies have urged the Nigerian Electricity Regulatory Commission (NERC) to adjust tariffs following the Federal Government’s April 1st increase in domestic gas prices to $2.18 per MMBtu, warning that regulatory delays could worsen the sector’s ₦6.6 trillion liquidity crisis.

Electricity generation companies (GenCos) have formally called on the Nigerian Electricity Regulatory Commission (NERC) to conduct an immediate review of electricity tariffs following the Federal Government’s upward adjustment of the domestic base price of gas. Effective April 1, 2026, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) raised the price of natural gas supplied to power plants from $2.13 to $2.18 per MMBtu. Dr. Joy Ogaji, the Chief Executive Officer of the Association of Power Generation Companies (APGC), emphasized on Monday that while the price increase is a regulatory reality, the primary concern for operators is the potential for a “regulatory gap” if NERC fails to reflect these new costs in the Multi-Year Tariff Order (MYTO). “Gas price, whether it is raised to $10, is not really our problem. Gas is a feedstock and a pass-through cost. So if the regulator in the power sector is comfortable with the increase, it is not a problem for us because whatever we are charged, we pass it down to consumers,” Ogaji stated.

The push for a tariff review comes at a time when the power sector is grappling with a staggering liquidity crisis, with GenCos estimating that the federal government’s debt to the sub-sector could hit ₦6.6 trillion by the end of this month. Ogaji argued that the transparency of tariff computations is essential for the survival of generation companies, which currently see only about 35% of their monthly invoices settled. She urged NERC to acknowledge the $0.05 increment as a direct cost of production to avoid further distorting the market’s financial health. “All we want is for NERC to acknowledge the new base price and input it into tariff calculations. There is now a clear difference between what we used to pay and the new price, and that gap must be recognised,” she added, noting that without this recognition, the “gas constraint” challenge that has kept national generation at an average of 4,000MW would only intensify.

Despite the focus on pricing, the APGC boss maintained that the fundamental issue plaguing the Nigerian Electricity Supply Industry (NESI) remains poor payment discipline rather than the cost of gas itself. She questioned the efficacy of price adjustments in an environment where historical debts remain unpaid and current revenue collection is insufficient to cover the value chain’s requirements. “For us, whether the price is high or low is not the issue. What matters is whether payments are made for what is supplied. Even when the price was low, what percentage of invoices were settled? If you increase the price and payments are still not made, what difference does it make?” she queried. This latest friction between gas pricing and power tariffs occurs as the Tinubu administration continues to implement reforms aimed at attracting investment into the energy sector under the Petroleum Industry Act (PIA).

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