The Federal Government has approved ₦185 billion for the settlement of long-standing debts owed to natural gas producers for supplies to power generation companies.
In a statement on Thursday, December 4, the spokesperson for the Minister of State for Petroleum Resources (Gas), Louis Ibah, said the government took the step following President Bola Tinubu’s directive to clear arrears that have stalled investment in the sector.
He said the decision, endorsed on Wednesday by the National Economic Council (NEC) chaired by Vice-President Kashim Shettima, represents one of the most significant interventions in the nation’s energy sector in recent years.
According to him, “The ₦185 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 noted that the payment would be executed through a royalty-offset arrangement and is “expected to restore confidence among domestic and international gas suppliers who have long expressed concern about persistent indebtedness in the sector.”
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, welcomed the move, describing it as a decisive step toward “revitalising Nigeria’s gas sector and strengthening its power-generation capacity in a sustainable manner.”
He commended President Tinubu’s leadership, adding that the intervention aligns with the Decade of Gas Initiative, which targets unlocking more than 12 billion cubic feet per day (bcf/d) of gas supply by 2030.
Ekpo said clearing the arrears would restore investor confidence and rebuild trust between the government and gas producers, “many of whom have delayed or reduced new investments due to uncertainty over payments.”
He explained that improved financial stability would help revive upstream activities by accelerating exploration and production, ultimately boosting Nigeria’s gas output.
The minister added that increased gas supply would also enhance electricity generation and reduce the persistent power shortages affecting businesses nationwide.
He said the expected gains would stimulate wider economic growth since reliable energy is crucial for industrialisation, job creation and competitiveness.
Director of the Decade of Gas Secretariat, Ed Ubong, said the approved plan to clear gas-to-power debts sends a strong message of President Tinubu’s commitment to fixing structural weaknesses across the gas value chain.
According to him, “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 added that the move could unlock stalled projects, revive investor interest and rebuild momentum behind Nigeria’s transition to a gas-driven economy.
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