In a major move to tackle Nigeria's chronic power problems, the Federal Government has initiated the process to clear N185 billion in longstanding debts owed to natural gas producers. This crucial intervention, sanctioned by the National Economic Council (NEC) under Vice President Kashim Shettima, is designed to unlock more reliable gas supply for electricity generation.
A Decisive Step for Energy Sector Revival
The Minister of State for Petroleum Resources (Gas), Dr. Ekperikpe Ekpo, announced the approval on 6 December 2025, describing it as a pivotal action to revitalize Nigeria's gas industry. He emphasized that settling these legacy obligations—accumulated from past gas supplies to power stations—is fundamental to rebuilding trust with producers.
For years, these unpaid debts have crippled cash flow for gas companies, discouraged new exploration and production investments, and directly contributed to reduced gas availability for power plants. This has exacerbated the national electricity shortage, affecting homes and businesses across Nigeria.
Mechanism and Expected Impact
The repayment will be executed through a royalty-offset arrangement, a structured mechanism to settle the government's dues. According to Minister Ekpo, this financial clearance is expected to restore confidence among both domestic and international gas suppliers.
The minister directly linked this action to President Bola Tinubu's Decade of Gas initiative, which targets unlocking over 12 billion cubic feet per day (bcf/d) of gas supply by 2030. With improved financial stability, upstream activities are anticipated to accelerate, leading to:
- Increased gas production and supply to the power sector.
- Enhanced power generation capacity, easing the longstanding electricity deficits.
- Stimulation of broader economic growth through reliable energy for industrialization and job creation.
Broader Economic and Investment Implications
Ekpo further stated that resolving the debt overhang, coupled with better fiscal discipline and transparency, will make the sector more attractive for fresh local and foreign investments. Mr. Ed Ubong, Coordinating Director of the Decade of Gas Secretariat, noted that the debt clearance plan sends a powerful signal of commitment from the Tinubu administration to address structural weaknesses in the gas-to-power value chain.
This intervention marks one of the most significant federal moves in Nigeria's energy sector in recent years, with the potential to create a more sustainable and reliable foundation for the nation's power generation and economic ambitions.
