The Federal Government has approved the payment of N185 billion in long-standing debts owed to natural gas producers, a major step aimed at stabilising gas supply and improving electricity generation across the country.
The debt-clearance plan, authorised by President Bola Tinubu and endorsed on Wednesday by the National Economic Council (NEC) led by Vice-President Kashim Shettima, is seen as one of the most significant interventions in Nigeria’s energy sector in years.
In a statement issued Thursday, Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), said settling the arrears would immediately help rebuild investor confidence and unlock stalled gas projects.
How the debt affected gas and power
Ekpo explained that the accumulated N185 billion debt, linked to past gas supply obligations, had severely weakened producers’ cash flow, slowed operations, and discouraged fresh exploration.
The backlog also reduced gas available to power plants, contributing to persistent electricity shortages nationwide.
To address this, the government will implement a royalty-offset arrangement that reassures both domestic and international suppliers who have repeatedly raised concerns about overdue payments.
A lifeline for gas supply and electricity generation
The Minister described the decision as a “decisive step towards revitalising Nigeria’s gas sector and strengthening power-generation capacity.”
He said the move aligns with the Decade of Gas initiative, which targets more than 12 billion cubic feet per day (bcf/d) of gas supply by 2030.
Ekpo noted that clearing the debts would:
- Restore trust between the government and gas producers
- Spur new investments in exploration and production
- Increase gas supply to power plants
- Improve electricity output for homes and businesses
- Stimulate broader economic growth
“Reliable power is the backbone of industrialisation and job creation,” he said.
Industry welcomes move
Ed Ubong, Coordinating Director of the Decade of Gas Secretariat, said the approval shows the Tinubu administration’s commitment to resolving structural problems across the gas-to-power value chain.
“This decision clears legacy liabilities and gives producers confidence that gas supplied to power plants will be paid for,” he said. “It could unlock stalled projects and revive investor interest in Nigeria’s gas-driven economic transition.”
Background: Nigeria’s huge energy debts
The approval comes shortly after the Federal Government finalised frameworks for a N4 trillion government-backed bond to settle verified arrears owed to power Generation Companies (GenCos) and gas suppliers.
Industry players have long warned about the mounting debts:
- SPDC’s Managing Director said in 2024 that producers were owed $1.3 billion.
- The NMDPRA ordered suppliers to halt gas deliveries to indebted GenCos after debts exceeded N2 trillion.
By clearing part of these liabilities, government officials hope to restore stability to both the gas and power sectors.
