FG increases gas-to-power price to GenCos as rise in electricity tariffs looms

The Federal Government on Monday, 01 April caved in to pressure from gas producers announcing an increase in the wholesale price of gas-to-power generating companies (GenCos) by 11 per cent, from $2.18 per million British thermal units (MMBTU) to $2.42/MMBTU. The gas companies have been calling for an increase in wholesale gas-to-power prices given the rise in the price of gas in the international market. The increase would raise the cost of power generation as gas is a major fuel-for-power plant in the country as thermal power plants currently account for 80 per cent of the power generation. Also, the increase will raise the subsidy the Federal Government will now have to pay for electricity consumers unless they allow the market to charge a full cost-reflective tariff. The gas companies had since January this year reduced supply to power plants following years of unpaid invoices amounting to over $1.2 billion. The government intervened last month by paying $120 million to the companies, as the power supply across the country dwindled. However, the Federal Government said the adjustment in gas prices aligns with the Petroleum Industry Act, empowering regulatory authorities to set prices for the local market based on international benchmarks and cost considerations, ensuring adequate gas supply for domestic needs.