The federal government has approved ₦185 billion to clear long-standing natural-gas debts owed to producers who supply gas to power-generation firms. The move follows a directive from the presidency and was endorsed by the National Economic Council, chaired by the vice-president.
According to a statement from the office of the Ministry of Petroleum Resources (Gas), the accumulated “legacy debts … 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.”
The repayment will be executed through a royalty-offset arrangement, intended to restore faith among domestic and international gas suppliers that the government will honour its obligations.
Officials say this intervention is part of the broader “Decade of Gas” initiative, which aims to raise gas output to more than 12 billion cubic feet per day (bcf/d) by 2030. Clearing the arrears is viewed as critical to reviving upstream investment and ensuring the steady flow of gas to power plants.
In practical terms, the payment seeks to “revitalise Nigeria’s gas sector and strengthen its power-generation capacity in a sustainable manner,” according to the Minister of State for Petroleum Resources (Gas).
By resolving these debts, the government hopes to unblock stalled gas-to-power contracts, encourage fresh investment, and ultimately improve electricity supply, a long-standing bottleneck for businesses and households across Nigeria.
By settling ₦185 billion in energy-sector arrears, the government is likely to reignite investor interest and unlock stalled gas production, a move that could raise industrial output, create jobs, and reduce reliance on costly diesel generators. Improved power reliability could boost Nigeria’s GDP growth through enhanced business productivity and energy-driven growth.
