Nigeria is targeting September 2028 for the full deregulation of prices in the domestic gas market, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said.
Under the proposed framework, gas prices would increasingly be determined by commercial negotiations between buyers and sellers, as the market moves towards a willing-buyer, willing-seller system.
The NMDPRA Chief Executive Officer, Rabiu Umar, announced the target on Thursday at a gas market maturity workshop organised under the Decade of Gas initiative at the Petroleum Technology Development Fund (PTDF) in Abuja.
Umar said the authority was setting a 24-month window within which the necessary conditions for a fully functioning commercial gas market would be established.
“The journey we are starting should lead us to a place where we should target a 24-month, at best, period within which we will be able to declare the market to be truly a willing buyer, willing seller market,” he said.
He said the transition was expected to ensure that gas remained affordable to Nigerians while creating an environment capable of attracting investment and supporting the economic reforms of President Bola Tinubu.
According to Umar, the 2028 target is also consistent with the objectives of the Nigeria Decade of Gas initiative, which seeks to make gas a major source of energy for the country's economic development by 2030.
The NMDPRA boss said the move away from price regulation would depend on the level of maturity attained by different segments of the domestic gas market.
He said the process would be guided by the Petroleum Industry Act (PIA), which provides for the gradual evolution of the market from regulatory control towards increased commercial activity and competition.
“Invariably, this is [the] first time that we have been bold enough to set a clear target for our gas market transition,” Umar said.
He explained that Section 167 of the PIA envisages a gradual reduction in price regulation as commercial contracting becomes stronger and the market develops sufficient competition.
Umar, however, stressed that deregulation would not be undertaken solely on the basis of a fixed timeline.
He said the regulator would assess the market against a set of indicators designed to determine whether it was sufficiently mature to operate without extensive price controls.
These indicators, he said, include the availability and diversity of gas supplies, the number and quality of buyers and sellers, access to transportation infrastructure, the strength of commercial contracts and payment reliability.
Others include compliance with delivery obligations, availability of market information and the emergence of credible price signals.
Supply remains a concern
Umar said one of the major challenges facing the domestic gas market was the availability of sufficient gas despite Nigeria's abundant reserves.
He said the development of pipelines and other gas infrastructure would only deliver the desired economic benefits if adequate volumes of gas were available to utilise them.
The NMDPRA chief specifically cited the Ajaokuta-Kaduna-Kano (AKK) pipeline, stressing that sufficient gas supply would be required to make the project commercially viable.
“The focus right now is not just delivering the infrastructure, but ensuring that we have enough molecules to fill the pipeline,” he said.
He added that the role of NMDPRA would evolve alongside the market, with the regulator expected to focus increasingly on setting market rules, guaranteeing fair access, protecting competition and monitoring the conduct of participants.
Umar said the transition would also be sequenced according to the readiness of individual market segments.
This, he explained, would involve determining which segments could move first, the thresholds they would be required to meet and the safeguards that would have to be put in place before liberalisation.
Meanwhile, the regulator said it was close to completing the process for issuing gas distribution licences.
Umar said the licensing exercise would be concluded in the coming weeks, while successful applicants were expected to receive their licences in the fourth quarter of 2026.
The planned gas market reforms follow a price adjustment announced by NMDPRA in March, when the authority increased the price of natural gas supplied to power generation companies (GenCos) to $2.18 per million British thermal units (MMBtu).
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