FG Approves N185bn to Clear Gas Supply Debts Owed to Producers
The federal government has approved the release of N185 billion to settle long-standing debts owed to natural gas producers for past deliveries to power generation companies.
The decision follows President Bola Tinubu’s directive to resolve arrears that have discouraged investment and limited gas supply to the power sector. Louis Ibah, spokesperson for the minister of state for petroleum resources (gas), confirmed the development on Thursday, noting that the approval was endorsed by the National Economic Council (NEC) led by Vice-President Kashim Shettima.
According to Ibah, the debts had created significant cash-flow challenges for gas producers, slowed exploration and production, and contributed to Nigeria’s persistent electricity shortages.
“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,” he said.
The repayment will be executed through a royalty-offset mechanism, which the government believes will help restore confidence among both local and foreign suppliers who have long raised concerns about unsettled obligations.
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, described the approval as a decisive step toward revitalising the gas industry and boosting the country’s power-generation capacity in a sustainable way. He praised President Tinubu’s commitment to the “Decade of Gas” initiative, which targets unlocking more than 12 billion standard cubic feet per day of gas supply by 2030.
Ekpo said clearing the arrears will be crucial in rebuilding trust with producers, many of whom have stalled or scaled back investments due to uncertainty around government payments. He added that improved financial stability would support renewed exploration activities and increase Nigeria’s overall gas output.
He further explained that increasing gas supply to power plants would strengthen electricity generation and help reduce the chronic power shortages burdening households and businesses across the country. More reliable energy, he said, would also support industrial growth, job creation, and economic competitiveness.
Ed Ubong, director of the Decade of Gas Secretariat, welcomed the decision, calling it a strong signal of the administration’s resolve to address structural bottlenecks in the gas-to-power value chain.
“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.
He added that the intervention could unlock stalled projects, revive investor interest, and accelerate Nigeria’s transition toward a more gas-driven economy.
