The federal government has approved N185 billion to settle long-standing debts owed to natural gas producers for supplies to power generation companies, a move aimed at revitalising Nigeria’s energy sector.
In a statement on Thursday, Louis Ibah, spokesperson for the Minister of State for Petroleum Resources (Gas), said the government acted following President Bola Tinubu’s directive to clear arrears that have long hindered investment in the sector. The approval was endorsed by the National Economic Council (NEC), chaired by Vice-President Kashim Shettima.
“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 added that 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.”
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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.”
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He praised Tinubu’s leadership, noting that the intervention aligns with the Decade of Gas initiative, which seeks to unlock more than 12 billion cubic feet per day (bcf/d) of gas supply by 2030. Ekpo said clearing the arrears will have wide-ranging benefits, including restoring investor confidence in the sector.
The minister added: “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 further explained that improved financial stability would help revive upstream activities by accelerating exploration and production, ultimately increasing Nigeria’s gas output. He added that enhanced gas supply would boost power generation and help alleviate persistent electricity shortages that continue to affect businesses nationwide.
The minister also highlighted that the move is expected to stimulate broader economic growth, as reliable energy is vital for industrialisation, job creation, and national competitiveness.
Ed Ubong, Director of the Decade of Gas Secretariat, said the government’s plan to clear gas-to-power debts demonstrates President Tinubu’s commitment to addressing structural weaknesses across the sector.
“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, adding that the intervention could unlock stalled projects, revive investor interest, and rebuild momentum for Nigeria’s transition to a gas-driven economy.
