Federal Government Pays $120 Million of Gas Debts to Power Sector

The Federal Government of Nigeria has made a significant payment of $120 million out of the $1.3 billion owed to gas companies for the supply of gas to power gas-fired plants across the country. This move aims to address the current low power supply being experienced in Nigeria due to reduced gas supply to power-generating companies.

The Minister of Power, Chief Adebayo Adelabu, recently attributed the decline in power generation and subsequent poor supply since January to the halt in gas supply caused by the sector’s indebtedness to gas producers.

Nigeria heavily relies on thermal power plants fueled by gas for over 70% of its electricity generation. However, disruptions in gas supply due to unpaid debts have exacerbated the country’s power challenges.

Speaking at the 7th Nigeria International Energy Summit in Abuja, the Director of the Decade of Gas Secretariat, Ed Ubong, expressed satisfaction that the government had cleared a substantial portion of the gas debts, amounting to $120 million, between October and January.

Ubong highlighted ongoing efforts to develop a framework addressing the lapses leading to the accumulation of significant gas debts in the power sector. He emphasized the importance of building capacity and implementing sustainable solutions to mitigate future challenges.

In related developments, the Nigerian National Petroleum Company Limited (NNPCL) called for enhanced collaboration among upstream operators, particularly independent producers, to address challenges hindering the effective development of divested assets in the oil sector.

Oritsemeyiwa Eyesan, the Executive Vice President, Upstream at NNPCL, emphasized the need for collective action and innovative strategies to overcome obstacles such as insecurity, lack of finance, and technological capacity in the sector.

Eyesan stressed the importance of collaboration, suggesting the establishment of a dedicated “war room” to address challenges collectively and implement concrete plans for resolving issues facing the industry.