The Federal Government of Nigeria has taken a step forward by clearing $120 million out of the staggering $1.3 billion debt owed to gas suppliers. This debt has been a primary cause of the reduced gas supply to the nation’s gas-fired power plants, leading to widespread blackouts across the country. The situation has been dire, with many gas suppliers either reducing their supply or halting it altogether due to the outstanding payments owed by the Generating Companies (Gencos) to these gas-producing firms.
Nigeria, which relies heavily on thermal power plants for over 70% of its electricity— with the remainder generated by hydropower plants—has been grappling with this issue since January, as reported by the Minister of Power, Chief Adebayo Adelabu. The reduction in gas supply has led to a noticeable decline in power generation, impacting households and businesses nationwide.
The announcement was made at the 7th Nigeria International Energy Summit in Abuja, where Ed Ubong, the Director of the Decade of Gas Secretariat, expressed his satisfaction with the government’s efforts to address part of the outstanding debt. This payment is seen as a critical step towards restoring confidence among gas suppliers and ensuring the continued operation of the country’s power infrastructure.
The Decade of Gas Secretariat, operating under the Federal Ministry of Petroleum Resources (Gas), plays a pivotal role in shaping the future of Nigeria’s gas industry. The government’s acknowledgment of the debt and its partial payment reflects a broader strategy to support the electricity sector, which is currently under significant financial strain. With electricity subsidies and the sector’s overall debt to gas producers and generating companies soaring, the government faces the challenging task of navigating towards a more sustainable and financially viable power supply model.
In light of these developments, the Director highlighted ongoing efforts to develop a framework aimed at preventing such financial discrepancies in the future. This initiative is expected to pave the way for more stable and reliable gas supply chains, essential for the country’s power generation needs.
Moreover, the summit also became a platform for the Nigerian National Petroleum Company Limited to call for greater collaboration among upstream operators, particularly independent producers. This collaboration aims to address the challenges that have impeded the growth and effective development of divested assets in the oil sector. The company’s Executive Vice President, Oritsemeyiwa Eyesan, emphasized the need for a unified approach to overcome issues like insecurity, financial constraints, and technological limitations that have hindered production growth in the past.
