FG approves N185bn to clear outstanding gas-to-power debts

FILE: Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo

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The Federal Government has approved the payment of N185bn in outstanding debts owed to natural gas suppliers in a move aimed at easing liquidity constraints in the sector and improving electricity generation nationwide.

Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, disclosed this in a statement issued by his media aide, Louis Ibah, on Thursday.

He said the approval was given on Wednesday by the National Economic Council, chaired by Vice President Kashim Shettima.

Ekpo said the long-standing debts had weakened cash flow for producers, slowed investments, and limited gas deliveries to power plants — a development that worsened Nigeria’s persistent electricity shortages.

“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 read.

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 said 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.

According to him, clearing the arrears will restore investor confidence, accelerate exploration and production, and ultimately boost gas output and power generation.

“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 minister noted that the gains were expected to stimulate broader economic growth, as reliable energy underpins industrialisation, job creation and competitiveness.

According to the statement, the Coordinating Director of the Decade of Gas Secretariat, Ed Ubong, said the approval sends a powerful signal of the government’s commitment to address structural weaknesses in the gas-to-power 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 stated.

The move comes after gas producers in 2024 halted supplies to power plants over unpaid debts.

The payment is expected to boost gas supply to electricity generation companies, potentially raising the national grid output, which has remained around 5,000MW for months.

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