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.
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