The Federal Government has approved the settlement of N185 billion in long-standing debts owed to natural gas producers, as part of efforts to revitalise the gas sector and stabilise power generation nationwide.
The payment, 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 interventions in Nigeria’s energy sector in recent years.
In a statement on Thursday, quoted by the News Agency of Nigeria (NAN), the Minister of State for Petroleum Resources (Gas), Dr. Ekperikpe Ekpo, said clearing the debts would bring wide-ranging benefits, starting with the restoration of investor confidence.
He explained that the N185 billion arrears, accumulated from past gas supply obligations, had strained producers’ cash flow, limited operations, and discouraged further exploration and production.
According to him, the backlog had also reduced gas supply to power plants, worsening electricity shortages nationwide. The approved settlement will be executed through a royalty-offset arrangement designed to reassure both domestic and international suppliers who have repeatedly raised concerns about government indebtedness.
The Minister described the approval as a “decisive step towards revitalising Nigeria’s gas sector and strengthening its power-generation capacity in a sustainable manner.”
He stated 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.
“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.
Ekpo explained that improved financial stability would help revive upstream activity by accelerating exploration and production, ultimately boosting Nigeria’s gas output.
He added that increased gas supply would also boost power generation and ease the long-standing electricity shortages that continue to hinder businesses across the country.
According to the Minister, these gains are expected to stimulate broader economic growth, as reliable energy underpins industrialisation, job creation, and competitiveness.
He added that better fiscal discipline and enhanced transparency across the sector would further attract fresh investment from both local and foreign players.
The Coordinating Director of the Decade of Gas Secretariat, Mr Ed Ubong, said the approved plan to clear gas-to-power debts showed commitment from President Tinubu to address structural weaknesses across the value chain.
“This decision underlines the Federal Government’s determination to clear legacy liabilities and gives gas producers the confidence that supplies 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,” said Ubong.
Recently, the Federal Government concluded implementation frameworks for a N4 trillion government-backed bond aimed at settling 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 are currently grappling with outstanding payments amounting to $1.3 billion.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had late last year directed gas producers to suspend the supply of gas to indebted GenCos, following the accumulation of over N2 trillion in debts owed to gas producers by the Federal Government and several power generation companies.
