Nigeria Clears $128 Million Gas Debts to Reinforce Power-Supply Chain

Abuja — In a major move aimed at stabilising Nigeria’s troubled electricity sector, the federal government has approved payment of 185 billion naira (approximately USD 128 million) to settle long-standing debts owed to natural gas producers supplying power generation companies (GenCos).

The decision, endorsed by the National Economic Council (NEC), chaired by the Vice President, follows a directive from Bola Tinubu to clear legacy arrears that have undermined investment, strained cash flow, and restricted gas delivery to power plants.

According to the government, the payment will be executed through a “royalty-offset arrangement”. This structure is intended to relieve the financial burden on gas producers while helping to restore consistent gas supply to thermal power stations.

What This Means for Nigeria’s Power Sector

For years, delayed payments to gas suppliers have disrupted supply chains, undermined investor confidence, and contributed significantly to widespread power outages that have constrained industrial output and everyday life.

By clearing this liability, the government hopes to unlock a series of benefits: renewed upstream production, more reliable gas delivery to power-generation firms, increased electricity output, and a restored impetus for long-stalled gas-to-power and infrastructure projects.

Officials say the move aligns with the administration’s broader “Decade of Gas” agenda, which aims to almost double the country’s gas production and supply to 12 billion cubic feet per day (bcf/d) by 2030.

Government Reaction and Industry Confidence

Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), described the payment as “a decisive step toward revitalising Nigeria’s gas sector and strengthening power-generation capacity in a sustainable manner.” He emphasised that the settlement is intended to restore investor confidence and guarantee that future gas deliveries to power plants will be honoured.

For many gas producers and utilities that had reduced output or postponed new investments due to fears over unpaid dues, the development comes as a welcome relief. Some industry observers believe the clearance could attract renewed private and foreign investment in gas-to-power infrastructure.

Challenges Ahead Remain

While debt clearance is a critical first step, long-standing structural challenges in the power sector — including ageing transmission infrastructure, inefficiencies, vandalism, and low generation capacity — remain unresolved. Analysts warn that sustained improvement in electricity supply will depend on complementary reforms, reliable gas supply, and renewed capital investment in generation and distribution.

Moreover, transparency and accountability in implementation will be essential to ensure that settlements translate into tangible service improvement.

Outlook: A Tentative Path Forward for Reliable Power

If accompanied by consistent gas supply and effective sector reforms, the debt settlement may mark a turning point for Nigeria’s power industry. For businesses, factories, and households long burdened by chronic power shortages, the move offers hope for improved reliability — and, potentially, a stronger economic rebound.

For now, all eyes are on how gas producers and the government translate the cleared debt into a dependable, long-term power-supply regime.