Nigeria’s New Natural Gas Pipeline Tariff Regulation: Evaluating The Tariff Methodology

The Regulations recognize the criticality of developing a sustainable domestic gas pipeline network and set out the tariff principles and matrices that will underpin the economic feasibility of gas pipeline system development in Nigeria. Whilst the Regulations frown on discrimination amongst shippers with similar characteristics, the Regulations embrace the principles of differentiation to cater to shippers in different classes based on certain indices such as the peculiarities of the relevant end-user market, vertically integrated arrangements, existence of shipper financing obligations, and the stage of the development of the gas pipeline infrastructure.

The Regulations also make very interesting provisions to promote accountability and transparency in the tariff setting, and it takes into consideration market economics, such as the behaviour of shippers towards the payment of agreed tariffs.