FG approves N185bn to settle gas debts to boost power supply

The federal government has approved the sum of N185 billion for the settlement of long-standing debts owed to natural gas producers for supplies to power generation firms.

In a statement on Thursday, Louis Ibah, spokesperson for the minister of state for petroleum resources (gas), said the federal government took the decisive step following President Bola Tinubu’s directive to clear arrears that have hindered investments.

He said the move, endorsed yesterday by the national economic council (NEC) headed by Vice-President Kashim Shettima, represents one of the most significant interventions in Nigeria’s energy sector in recent years.

“The N185 billion legacy debts — longstanding government obligations to gas producers for past supplies — have strained cash flow and hindered operations, discouraged further exploration and production, and reduced gas supply for power generation, thereby worsening Nigeria’s power shortages and unreliable electricity supply,” Ibah said.

He said the payment, which will 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”.

Commenting on the development, Ekperikpe Ekpo, minister of state for petroleum resources (gas), described the approval as a decisive step towards “revitalising Nigeria’s gas sector and strengthening its power-generation capacity in a sustainable manner”.

He commended Tinubu’s leadership, noting that the intervention aligns with the decade of gas initiative, which aims to unlock more than 12 billion cubic feet per day (bcf/d) of gas supply by 2030.

Ekpo said clearing the arrears will yield wide-ranging benefits, beginning with restoring investor confidence in the sector.

The minister said settling the debts is crucial to rebuilding trust between the government and gas producers,” many of whom have delayed or reduced new investments due to uncertainty over payments”.

Ekpo explained that improved financial stability would help revive upstream activities by accelerating exploration and production, ultimately increasing Nigeria’s gas output.

He added that increased gas supply would also enhance power generation and alleviate the persistent electricity shortages that continue to hinder businesses nationwide.

The politician noted that the gains are expected to stimulate broader economic growth, as reliable energy is critical for industrialisation, job creation, and competitiveness.

Ed Ubong, director of the decade of gas secretariat, said the approved plan to clear gas-to-power debts sends a strong signal of Tinubu’s commitment to addressing structural weaknesses across the sector’s 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,” Ubong said.

This, Ubong said, could unlock stalled projects, revive investor interest and rebuild momentum behind Nigeria’s transition to a gas-driven economy.(The Cable)