ABUJA—The Federal Government has approved the payment of ₦185 billion in outstanding legacy debts owed to natural gas suppliers, a decisive measure aimed at injecting critical liquidity into the energy sector and stabilizing Nigeria’s fragile electricity generation capabilities.
The massive financial clearance addresses a long-standing crisis that has plagued the power value chain, hindering investment and exacerbating the nation’s persistent electricity shortages.
Easing Liquidity Constraints and Boosting Supply
For years, the accumulation of unpaid invoices from the national bulk purchaser, the Nigerian Bulk Electricity Trading PLC (NBET), had severely weakened the financial health of gas producers. These liquidity constraints had a cascading negative effect:
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Slowed Investment: Gas suppliers lacked the necessary capital for upstream investment, maintenance, and expansion needed to meet growing demand.
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Limited Deliveries: Producers frequently curtailed gas deliveries to power generation companies (GenCos), citing non-payment and crippling cash flow issues.
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Worsened Shortages: Since gas-fired turbines account for a majority of Nigeria’s power generation capacity, limited gas supply directly translated into frequent blackouts and reduced electricity output nationwide.
The approval of the ₦185 billion payment is expected to immediately ease the cash flow squeeze on gas companies, allowing them to optimize their operations and prioritize gas supply to thermal power plants.
A Step Toward Sector Stabilization
The payment is seen by industry analysts as a critical step in restoring investor confidence and signaling the Federal Government’s commitment to addressing the systemic debt issues plaguing the power sector.
While the payment addresses the legacy debt, experts emphasize that the government must still implement a sustainable mechanism to guarantee the timely payment of future gas deliveries. Without resolving the underlying issues of cost-reflective tariffs and systemic metering gaps, the debt cycle risks restarting.
Ultimately, the goal of this financial intervention is to ensure that Nigeria’s gas-to-power framework operates efficiently, translating the new liquidity into improved gas-fired electricity generation and greater reliability for homes and businesses.
