Market Forces Should Determine Gas Prices For Sustainability-DPR
As the Federal Government moves its focus to gas sector development to yield economic growth, the Department of Petroleum Resources, DPR, has advocated the need for a free market, where market forces are allowed to influence gas prices and the entire market environment.
The Director of the DPR, Sarki Auwalu in a statement on Tuesday noted that promoting a free market would guarantee the security of supply and demand of the commodity and also enable it to contribute meaningfully to Nigeria’s economic development.
He said, “Whereas references have been made to the other elements in this discussion, right pricing of gas is requiring particular attention to ensure the security of gas supply and security of credible gas demand.
“This is because upstream gas producers must be assured that they will receive fair and equitable returns for their investments whereas, the price must be such that the end-users are able to pay for gas offtake in a reliable and consistent manner.”
Auwalu noted that the right and market-based pricing of gas is critical, as it would assure producers of returns on their investments and also ensure that the commodity is affordable to consumers.
He outlined five critical enablers for gas development, as Nigeria moves to leverage its abundant gas resources for national growth, diversification of the economy and to use gas as the fuel for economic transformation.
He said, “The most robust and sustainable pricing mechanism is that which ‘let the market speak’ in a way that all costs are reflective of prevailing market conditions and for which the economic dynamics of demand and supply are allowed to interplay in an open, transparent, and free-market environment.
“Thus, our drive as a nation should be early attainment to the ‘Willing buyer; willing seller’ market status.
“Any transitional pricing arrangements, today, must be structured to quickly give way for market-led pricing regime and conditions.”
Auwalu, who commended the efforts of the President Muhammadu Buhari’s led administration in ensuring the development of the sector, said the ongoing construction of the ELPS-II, OB3 and AKK pipelines among others, is critical backbone gas infrastructure required to improve gas deliverability and availability.
He added that the government was also working towards the expeditious passage of the Petroleum Industry Bill which would enhance clarity in legislative, regulatory, fiscal, and administrative frameworks in the industry.
He said, “This bill, when passed into law, will eliminate the uncertainties and bottlenecks associated with gas development in Nigeria and accelerate the growth of the Nigerian gas market to a fully developed and matured status.
“It will also enhance the domestic gas delivery obligation, tariffing structure and methodology, open access regimes and revised gas pricing framework, to mention but a few.”