The Federal Government of Nigeria has approved the disbursement of NGN185bn ($128 million) to clear part of the accumulated debts owed to gas producers supplying power plants. The decision was ratified by the National Economic Council, chaired by the country’s vice president, following a directive issued by the president.
This measure aims to restore private sector confidence in the gas industry, a key component of national power production. The outstanding debts had led to a slowdown in investments, a contraction in cash flow for producers, and a decrease in gas supplied to power stations. The Minister of State for Petroleum Resources stated that the repayment would be carried out through a “royalty-offset arrangement,” allowing producers to recover the owed amount via reduced future payments to the state.
Target to double gas production
According to authorities, the initiative forms part of a broader government strategy to nearly double national gas production to 12 billion cubic feet per day by 2030. This ambition is driven by the need to ensure a more stable and reliable energy supply, in a country where frequent power outages continue to hinder industrial and commercial operations.
Nigeria, the continent’s largest oil producer, continues to face structural deficiencies in electricity distribution despite significant hydrocarbon reserves. The lack of sustained investments, combined with ageing infrastructure, hinders the sector’s expansion. The official acknowledgement of the arrears and their partial settlement sends a signal to potential investors of the government’s intent to stabilise the market.
Expected boost to the supply chain
Minister of State for Petroleum Resources Ekperikpe Ekpo said the payment represented “a decisive step” in reviving the gas sector and supporting efforts to stabilise electricity supply. He noted that this action is part of an ongoing reform package aimed at improving national energy security.
Gas producers, who supply both public and private thermal plants, had raised concerns over the economic viability of their operations amid prolonged payment delays. This partial reimbursement is expected to gradually restore the supply chain and increase gas volumes delivered to electricity sector operators.
