The Federal Government has approved the payment of one hundred and eighty five billion naira to settle long-standing debts owed to natural gas producers, a move expected to reinvigorate the country’s gas value chain and improve electricity supply nationwide.
The approval, issued by President Bola Tinubu and endorsed by the National Economic Council chaired by Vice President Kashim Shettima, is being described as one of the most sweeping interventions in the energy sector in recent years.
The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, confirmed the development and noted that the cleared arrears had accumulated from years of unmet gas supply obligations.
According to him, these outstanding payments weakened the financial strength of producers, slowed investment decisions and limited their ability to support power plants with adequate gas volumes.
The News Chronicle gathered that the backlog of unpaid invoices also contributed to declining electricity generation as gas suppliers became increasingly cautious in dealing with power companies that were unable to meet payment commitments.
The newly approved settlement will be carried out through a royalty-offset system aimed at restoring trust between government and producers who have repeatedly raised concerns about the mounting debts.
Ekpo described the approval as a decisive policy shift that aligns with the Decade of Gas agenda, which targets significant expansion of domestic gas supply before the end of the decade.
He added that improved liquidity among producers is expected to stimulate exploration activities and boost upstream output, which in turn will support power generation and reduce the persistent electricity shortages affecting homes and industries.
The Coordinating Director of the Decade of Gas Secretariat, Ed Ubong, explained that the decision signals a renewed commitment by the Tinubu administration to resolve structural weaknesses across the gas-to-power chain.
He noted that the clearance of debts has the potential to revive stalled projects, rebuild investor interest and strengthen Nigeria’s long-term transition to a gas-driven economy.
This move comes shortly after the Federal Government finalised frameworks for a multitrillion-naira bond programme that will settle verified debts owed to power generation companies and gas suppliers.
Recent disclosures indicate that producers are still owed significant sums, highlighting the scale of the challenge the government is attempting to resolve.
