Nigeria eyes cost-reflective gas prices to unlock investment

The Nigerian government is signalling a major shift in its energy policy as it explores a transition toward cost-reflective pricing within the domestic gas sector. With this move, the government hopes to attract much-needed private investment, eliminate mounting debts in the gas-to-power value chain, and ultimately stabilise the country’s energy supply.

Ekperikpe Ekpo, Minister of Petroleum Resources (Gas), stated this while giving his ministerial remarks at the Nigerian International Energy Summit in Abuja on Thursday. This development, he said, aligns with government plans to move Nigeria from ‘exporting molecules to exporting value,’ thereby accelerating the country’s evolution into a competitive, industrial economy.

The Minister, noting the importance of gas to the Nigerian economy, disclosed that alongside ensuring cost-reflective pricing, efforts were ongoing to simplify licensing processes, grow local content, and shorten project delivery timelines.

He said, “Today, gas fuels over 70 percent of Nigeria’s on-grid electricity generation. But to power our industrialisation ambitions, we are strengthening the entire gas-to-power chain. Our strategic focus includes long-term, commercially viable gas supply agreements for power plants; sustained implementation of the NEC-approved debt resolution framework; and the expansion of critical infrastructure—pipelines, processing plants, and metering systems.

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“Beyond power, gas is the lifeblood of industry—supporting agriculture, manufacturing, petrochemicals, and transportation. We are promoting the development of gas-based industrial hubs such as the Brass Gas Hub; wider adoption of LPG and CNG for households, transport, and SMEs; and small-scale modular gas commercialisation to empower entrepreneurs and host communities.”

He also explained that, working closely with the power sector, the government has achieved the long-awaited resolution of legacy debts owed to gas producers, following Presidential approval and ratification by the National Economic Council.

This resolution, according to him, has restored confidence in the domestic gas market and is unlocking new investments in gas supply for power generation.

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Also speaking, Saidu Mohammed, Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), noted that few companies operating power plants in the country have bankable commercial gas sales agreements.

For him, driving a viable gas sector requires the promotion of the commercial side of the industry. He emphasised that efforts must be channelled toward ensuring gas resources are used to develop not only the energy market but also the catalysts for all other sectors of the economy.

“And when I say all other sectors, I mean it. From agriculture to our social lives, all can be driven by this single commodity,” Mohammed said.

“We have been talking of gas-to-power since I was a younger engineer… unfortunately, in Nigeria, we are still hovering around the same levels. I think it was the first or second year of the Obasanjo regime, we celebrated 4,500 megawatts of electricity generated. Twenty-five years later, we are still hovering around 5,000 megawatts. This is not because there is no generating capacity—there is up to 13,000 megawatts—but there is a constraint in terms of wheeling capacity.”

“The fundamental question is, every time you hear ‘no gas, no gas, no gas,’ I ask the power plants: how much gas did you buy that was not delivered? When we ask those questions, you hardly get an answer. I think we have no more than one or two power plants today that have bankable commercial gas sales agreements. If we don’t move the commerciality, we will not move those molecules. Gas is a commodity that is sold before you even start drilling for it. If there is no buyer, we don’t look for it,” he said.

Speaking further, Mohammed said that gas is not just an energy commodity but an economic enabler and a critical factor needed to provide a sustainable electricity supply.

He added that the Petroleum Industry Act (PIA) considers the contribution of gas to key sectors when setting prices. The Authority sets prices for power, adds 50 cents for gas-based industries, and caps prices for commercial users.

“Without power, there is no industrial growth. And without industrial growth, there is no economic development. That is what gas is supposed to do—revitalise this economy of ours,” he added

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