The Federal Government has approved the payment of N185 billion in long-standing debts owed to natural gas producers, in a move aimed at revitalising the gas sector and improving electricity generation across the country.
The intervention, authorised by President Bola Tinubu and endorsed on Wednesday by the National Economic Council (NEC) chaired by Vice-President Kashim Shettima, is regarded as one of the most significant financial commitments to Nigeria’s energy sector in recent years.
In a statement on Thursday, the Minister of State for Petroleum Resources (Gas), Dr Ekperikpe Ekpo, said the settlement of the debts would deliver wide-ranging benefits, beginning with the restoration of investor confidence in Nigeria’s gas value chain.
He explained that the N185 billion arrears—accrued over years from unmet gas supply obligations—had weakened producers’ cash flow, slowed operations, and discouraged exploration and new investments. The backlog, he noted, also reduced gas supply to power plants, exacerbating electricity shortages nationwide.
The approved settlement will be executed through a royalty-offset mechanism designed to reassure domestic and international suppliers who have repeatedly expressed concerns over the government’s indebtedness.
Describing the approval as a “decisive step towards revitalising Nigeria’s gas sector and strengthening its power-generation capacity,” Ekpo said the intervention aligns with the Decade of Gas initiative, which targets more than 12 billion cubic feet per day (bcf/d) of gas supply by 2030.
“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,” he said.
He added that improved financial stability in the sector would accelerate upstream activity, boost exploration and production, and ultimately increase Nigeria’s overall gas output.
According to him, enhanced gas supply will support power generation, easing the chronic electricity shortages that continue to hinder households and businesses across the country. The anticipated improvements, he noted, should stimulate broader economic growth, given the central role of reliable energy in industrialisation, job creation, and competitiveness.
Ekpo also emphasised that strengthened fiscal discipline and greater transparency would help attract new investments from local and foreign stakeholders.
Tinubu administration showing commitment, says Decade of Gas Secretariat
The Coordinating Director of the Decade of Gas Secretariat, Mr Ed Ubong, welcomed the approval, saying it demonstrated the administration’s resolve to address structural weaknesses in the gas-to-power value chain.
“This decision underlines the Federal Government’s determination to clear legacy liabilities and gives gas producers the confidence that supplies to power generation will be honoured,” Ubong said. “It could unlock stalled projects, revive investor interest, and rebuild momentum behind Nigeria’s transition to a gas-driven economy.”
Background
The approval comes as the Federal Government finalises implementation frameworks for a N4 trillion government-backed bond to settle verified arrears owed to power Generation Companies (GenCos) and gas suppliers.
In 2024, the Managing Director of the Shell Petroleum Development Company of Nigeria (SPDC), Osagie Okunbor, disclosed that gas producers were grappling with outstanding payments totalling $1.3 billion.
In December 2024, Nairametrics reported that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had directed gas producers to suspend supply to indebted GenCos following the accumulation of more than N2 trillion in debts owed by the Federal Government and various power generation companies.
The latest intervention is expected to ease tensions in the sector and provide a pathway towards more reliable electricity supply for Nigerians.
