Nigeria’s electricity supply faces further disruptions as unpaid debts exceeding N639bn to gas suppliers threaten power generation, with industry stakeholders warning that recurring government bailouts will not resolve the sector’s mounting financial crisis.
The stakeholders said the absence of a sustainable payment mechanism for gas suppliers, inadequate investment in gas production and weak transmission infrastructure continued to undermine electricity supply across the country.
They raised the concerns at the sixth annual conference of the Power Correspondents Association of Nigeria in Abuja, where they identified the sector’s financial and structural challenges as major obstacles to Nigeria’s ambition of achieving a $1tn economy by 2030.
The warning comes amid renewed electricity disruptions nationwide. On November 5, the Nigerian Independent System Operator attributed declining grid generation to inadequate gas supply to thermal power stations and reduced water inflows into hydroelectric reservoirs, resulting in shorter supply hours and increased load shedding.
However, the Nigerian National Petroleum Company Limited subsequently said its gas transportation network remained available, stressing the need to distinguish between gas production, commercial supply arrangements and actual deliveries to power plants.
Speaking at the conference, the General Manager, Gas Commercial, Nigerian National Petroleum Development Company, Bashiru Adoke, said the gas-to-power crisis could be resolved but required sustained investment and a reliable payment structure.
He identified the inability of electricity market operators to adequately pay for gas supplied to generating companies as one of the major factors affecting power generation.
According to him, generating companies receive insufficient payments for the electricity they produce, making it difficult to settle gas invoices and sustain supply.
“There is no robust mechanism for payment of gas supply, because the proceeds from the market is not even enough to pay for gas supply,” Adoke said.
He explained that gas accounts for between 60 and 75 per cent of electricity production costs, while payments for energy generated were only about 40 per cent of the monthly invoices.
Adoke said the market currently owed more than N630bn for electricity generated and consumed by Nigerians, warning that the debt burden was threatening the sustainability of gas supply.
“We should try to establish a robust mechanism for payment of gas or else we would continue to have problems. The government intervention every three or four months won’t solve the issues,” he said.
He warned that government interventions aimed at clearing legacy debts would not prevent fresh liabilities from accumulating if current obligations remained unpaid.
“The intervention by the government, which is on the legacy debt, is from 2015 to 2025. What about the debt from 2025? It is already accumulating and it is not being addressed. It is a problem,” he added.
Adoke also called for increased investment in non-associated gas production, noting that reliance on associated gas produced alongside crude oil could expose electricity generation to disruptions in oil production.
He said the Federal Government had introduced incentives through executive orders to attract investment in gas projects but stressed that additional capital was needed to expand production.
The NDPHC official further warned that high electricity tariffs could push consumers towards solar energy and other forms of self-generation, threatening the long-term sustainability of the national grid.
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“I am scared for this national grid because by the time everybody abandons it and uses solar, I don’t know what the grid will be doing,” he said.
Meanwhile, the General Manager, Engineering, Transmission Company of Nigeria, Mojeed Akintola, said inadequate electricity generation remained a major constraint to transmission capacity.
He noted that the TCN could only transmit the electricity generated by power stations, adding that the company was expanding its capacity through the installation of new transformers and construction of transmission lines.
Akintola, however, identified right-of-way disputes and vandalism as major challenges delaying the completion of transmission projects.
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