Library / B 35 Federal Republic of Nigeria Official Gazette No. 34
B 35 Federal Republic of Nigeria Official Gazette No. 34

Page 8 of 11
B 42
PART III — TARIFF METHODOLOGY 1BY THE AUTHORITY
6.—(1)  The Authority shall determine pursuant to section 123(3) of the
Act, the tariff methodology applicable to —
(a)  new gas transportation pipelines operating on open access basis ;
(b)  new gas transportation pipelines being operated for its own account
of the operator ;
(c)  the review of tariffs for existing gas transportation pipelines ; and
(d)  the review of tariffs for the existing gas transportation network.
(2)  In determining the tariff methodology, the Authority shall take into
consideration —
(a)  whether the tariff shall be charged on —
(i)  a “postage stamp” basis, whereby the tariff shall be non-distance-
sensitive, having only one single tariff rate for the class of tariff, regardless
of the distance that natural gas is transported along the pipeline,
(ii)  on “distance-sensitive” basis, or
(iii)  combination of both “postage stamp” and “distance-sensitive”
basis ;
(b)  the classes of capacity charges that may apply ;
(c)  the methodology for determining the reference tariffs, including —
(i)  the determination of the capital costs or remaining capital costs
that may be considered,
(ii)  how the rate of return may be determined, in terms of a blended
rate for equity and debt, or a rate for equity only, as well as the level of
profitability that may be considered,
(iii)  the duration of the cashflow for which the capital recovery and
profitability shall be determined, and the term during which the reference
tariff shall apply, which may consist of different phases,
(iv)  the type of charge that may be applicable after the capital cost is
recovered,
(v)  the taxes and levies that may be included in the reference tariff
determination and the methodology for including such taxes and levies ;
(d)  the methodology for adjusting the reference tariff to the real tariffs
to be determined for each calendar year from which the capacity charges
for each year is derived ; and
(e)  the inflation index to be used for determining the actual capacity
charges for each year.
7.—(1)
Within one month after the Authority has published the various
tariff methodologies, an operator of existing gas transportation pipelines or
gas transportation network shall calculate the —
(a)  commodity charge ; and
Tariff
methodology.
Tariffs
calculation.