Power Supply Boost: FG Begins Payment Of N185bn Gas Debt

The N185 billion legacy government obligations to gas producers for past supplies had 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.

The payment, to 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.

Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, said the move, endorsed by the National Economic Council (NEC) headed by Vice President, Kashim Shettima, marked one of the most significant interventions in Nigeria’s energy sector in recent years.

In a statement issued by the his Spokesman, Louis Ibrahim, Ekpo described the approval as a “decisive step towards revitalising Nigeria’s gas sector and strengthening its power-generation capacity in a sustainable manner,”

While noting that the intervention aligned 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 would deliver wide-ranging benefits, beginning with restoring investor confidence in the sector.

According to him, settling the debts is crucial to rebuilding trust between the government and gas producers, many of whom have withheld or slowed new investments due to uncertainty over payments.

Ekpo explained that improved financial stability would help revive upstream activity by accelerating exploration and production, ultimately boosting Nigeria’s gas output adding that Increased gas supply would also boost power generation and ease the long-standing electricity shortages that continue to hinder businesses across the country.

The minister noted that these gains were expected to stimulate broader economic growth, as reliable energy underpins industrialisation, job creation and competitiveness.

In his intervention, Coordinating Director of the Decade of Gas Secretariat, Ed Ubong, said the approved plan to clear gas-to-power debts sends a powerful signal of commitment from the President to address structural weaknesses across the 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. It could unlock stalled projects, revive investor interest and rebuild momentum behind Nigeria’s transition to a gas-driven economy,” Ubong said.