FG moves to clear N185bn gas legacy debt

The Federal Government has begun the process of settling a long-standing N185 billion debt owed to natural gas producers, marking a major step towards revitalizing Nigeria’s energy sector.

This initiative, authorized by President Bola Ahmed Tinubu, aims to address the financial challenges that have long hindered the country’s gas industry and its power generation capabilities.

The debt, which has been a significant burden on the gas sector, stems from the government’s past obligations to gas producers for previous supplies.

For years, the arrears have led to strained cash flows, discouraging investment in exploration and production, and, ultimately, reducing the supply of gas to power plants. This has contributed to the chronic electricity shortages that have plagued Nigeria.

The National Economic Council (NEC), led by Vice President Kashim Shettima, endorsed the debt repayment plan on December 3, 2025, calling it one of the most impactful interventions in Nigeria’s energy sector in recent history.

The repayment, according to a statement by Louis Iba, spokesman to the Minister of State for Petroleum (Gas,) will be carried out through a royalty-offset arrangement and it is expected to restore confidence among both domestic and international gas producers.

The persistent debt issue had led to widespread concerns among suppliers, many of whom had slowed down their operations or withheld investments due to uncertainties over payment.

Minister of State for Petroleum Resources (Gas), Dr. Ekperikpe Ekpo, hailed the debt settlement as a crucial step in revitalizing Nigeria’s gas sector and improving its power-generation capacity.

According to Ekpo, the move aligns with the country’s Decade of Gas initiative, which aims to increase gas supply to over 12 billion cubic feet per day (bcf/d) by 2030.

“This is a decisive step towards strengthening the gas sector and ensuring sustainable power generation,” Ekpo said, adding, “Clearing these debts will restore investor confidence and boost gas production, ultimately leading to more reliable power supply across Nigeria.”

The Minister emphasized that with the financial stability this payment brings, there will be a renewed focus on exploration and production, key components in increasing the country’s gas output. This, in turn, is expected to alleviate the electricity crisis that continues to hamper Nigeria’s economy, particularly impacting businesses and industrial growth.

Ekpo pointed out that reliable energy supply is foundational to industrialization, job creation, and overall economic competitiveness. The intervention is expected to attract new investments, both domestic and foreign, and stimulate broader economic growth.

Mr. Ed Ubong, Coordinating Director of the Decade of Gas Secretariat, added that the payment plan signals the government’s commitment to resolving structural weaknesses in the gas sector.

“This is a powerful signal that the government is serious about clearing legacy liabilities and ensuring that gas supplies to power generation will be honored,” Ubong stated.

“It has the potential to unlock stalled projects, reignite investor interest, and accelerate Nigeria’s transition to a gas-driven economy,” he added.

The successful repayment of the N185 billion debt is expected to revitalize the gas sector, stimulate power generation, and bolster investor confidence, paving the way for a more sustainable and competitive energy landscape in Nigeria.

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