Federal government approves N185bn to settle long-overdue gas debts
The federal government has authorised the payment of N185 billion to clear longstanding debts owed to natural gas producers for supplies made to power-generating companies.
In a statement issued on Thursday, Louis Ibah, spokesperson for the minister of state for petroleum resources (gas), said the decision followed President Bola Tinubu’s directive to settle arrears that have stalled critical investments in the sector.
The move, endorsed on Wednesday by the National Economic Council (NEC) chaired by Vice-President Kashim Shettima, is considered one of the most substantial interventions in Nigeria’s energy landscape in recent years.
According to Ibah, “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 payment will be made through a royalty-offset mechanism and is “expected to restore confidence among domestic and international gas suppliers who have long expressed concern about persistent indebtedness in the sector.”
Reacting to the approval, Ekperikpe Ekpo, minister of state for petroleum resources (gas), said the move marks a significant step toward “revitalising Nigeria’s gas sector and strengthening its power-generation capacity in a sustainable manner.” He praised Tinubu’s leadership, noting that the intervention supports the Decade of Gas initiative, which seeks to unlock over 12 billion cubic feet of gas per day by 2030.
Ekpo said the clearance of arrears will help rebuild trust between the government and gas companies, “many of whom have delayed or reduced new investments due to uncertainty over payments.”
He added that improved financial certainty is expected to boost upstream activities, accelerate exploration and production, and increase the country’s gas output.
He further noted that enhanced gas supply would improve power generation and ease the chronic electricity shortages affecting households and businesses, while also stimulating broader economic growth through improved energy reliability.
Ed Ubong, director of the Decade of Gas Secretariat, said the approval sends a strong message of the administration’s resolve to tackle structural challenges within the gas 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,” he said.
Ubong added that clearing the debts could revive dormant projects, attract fresh investments, and restore momentum in Nigeria’s push toward a gas-driven economy.
