FG approves N185bn payment to gas producers

File photo: The Minister of Petroleum Resources (gas), Hon Ekperikpe Ekpo.

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The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, announced on Thursday that the Federal Government has taken a decisive step to revitalise the gas industry and stabilise power generation as President Bola Tinubu authorised the settlement of N185bn in long-standing debts owed to natural gas producers.

In a statement by his spokesman, Louis Ibah, Ekpo said the move was endorsed on Wednesday by the National Economic Council, headed by Vice President Kashim Shettima, saying it marked one of the most significant interventions in Nigeria’s energy sector in recent years.

The statement said that the N185bn legacy debts, longstanding government obligations to gas producers for past supplies, have strained cash flow and hindered operations, discouraged further exploration and production, and reduced gas supply for power generation, thereby worsening Nigeria’s power shortages and unreliable electricity supply.

“The payment, to be executed through a royalty-offset arrangement, is expected to restore confidence among domestic and international gas suppliers who have long expressed concern about persistent indebtedness in the sector,” the statement announced.

Ekpo described the approval as a “decisive step towards revitalising Nigeria’s gas sector and strengthening its power-generation capacity in a sustainable manner.” He praised President Tinubu’s leadership, noting that the intervention aligns with the Decade of Gas initiative, which aims to unlock more than 12 billion cubic feet per day of gas supply by 2030.

Ekpo said clearing the arrears will deliver wide-ranging benefits, beginning with restoring investor confidence in the sector. According to him, settling the debts is crucial to rebuilding trust between the government and gas producers, many of whom have withheld or slowed new investments due to uncertainty over payments.

Ekpo explained that improved financial stability will help revive upstream activity by accelerating exploration and production, ultimately boosting Nigeria’s 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 said.

The gas minister noted that these gains are expected to stimulate broader economic growth, as reliable energy underpins industrialisation, job creation, and competitiveness. He added that better fiscal discipline and enhanced transparency across the sector would further attract fresh investment from both local and foreign players.

Coordinating Director of the Decade of Gas Secretariat, Mr Ed Ubong, reportedly said that the approved plan to clear gas-to-power debts sends a powerful signal of commitment from President Tinubu to address structural weaknesses across the 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. It could unlock stalled projects, revive investor interest, and rebuild momentum behind Nigeria’s transition to a gas-driven economy,” Ubong was quoted as having said.

Recall that gas producers in 2024 stopped gas supply to power plants due to the unpaid debts. The payment of the debts is expected to boost gas supply to power plants, enhancing power generation capacity, which has stalled at around 5,000 megawatts for months.

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