FG clears N185bn gas debts to rescue power sector

The Federal Government has approved the payment of N185bn in long-standing debts owed to natural gas producers, a move aimed at revitalising Nigeria’s gas sector and stabilising power generation.

Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, disclosed the development on Thursday, stating that President Bola Tinubu authorised the intervention, which was subsequently endorsed by the National Economic Council (NEC) chaired by Vice President Kashim Shettima.

In a statement signed by his media aide, Louis Ibah, the minister described the approval as one of the most significant actions taken in recent years to address structural challenges in Nigeria’s energy industry.

According to the statement, the N185bn debt—accumulated from years of unpaid obligations for gas supplied to power plants—has negatively impacted producers’ cash flow, slowed exploration activities, and reduced gas deliveries for electricity generation.

These setbacks contributed to Nigeria’s persistent power shortages and unreliable supply.

The government plans to clear the arrears through a royalty-offset arrangement, a mechanism expected to rebuild trust among domestic and international gas producers who have long expressed concerns over the government’s indebtedness.

Ekpo hailed the approval as a “decisive step” toward restoring confidence in the sector and strengthening Nigeria’s power-generation capacity.

He said it aligns with the goals of the Decade of Gas initiative, which targets unlocking over 12 billion cubic feet of gas per day by 2030.

He noted that clearing the debt would have far-reaching benefits, including improved investor confidence, renewed upstream activity, accelerated exploration, and an increase in overall gas output.

“Increased gas supply will also boost power generation and ease the long-standing electricity shortages that continue to hinder businesses across the country,” he added.

The minister further emphasised that a more stable gas and power supply would stimulate economic growth, support industrialisation, enhance job creation, and improve Nigeria’s competitiveness.

He also highlighted the importance of fiscal discipline and transparency in attracting fresh investment.

Coordinating Director of the Decade of Gas Secretariat, Ed Ubong, welcomed the decision, saying it sends a strong signal of the government’s commitment to addressing structural weaknesses across the energy value chain.

“This decision underlines the Federal Government’s determination to clear legacy liabilities and give gas producers the confidence that supplies to power generation will be honoured,” he said, adding that the intervention could unlock stalled projects and reignite investor interest.

Gas producers had halted supply to power plants in 2024 due to the mounting debts.

With the approval of the N185bn payment, gas supply is expected to improve, potentially lifting Nigeria’s power generation capacity, which has hovered around 5,000 megawatts for months.