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FG to settle $2.16bn outstanding debt to gas producers

FG

By Motolani Oseni

There are assurances by the federal government to fix Nigeria’s power crises by settling outstanding debts of about $2.16 billion to energy producers and tackling gas supply shortages to power generating firms.

Nigeria has about 12,500 megawatts of installed capacity but only produces about a quarter of that, forcing households and businesses, including manufacturers to resort to diesel and petrol generators.

Power minister, Adebayo Adelabu, said on Wednesday that outstanding debts, inadequate gas supplies and ageing equipment were the key barriers hampering optimal power output.

Adelabu said power generators are currently owed 1.3 trillion naira ($858.65 million) and a $1.3 billion legacy debt from a decade ago.

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“Part of preparation to turn around and transform the sector is the settlement of existing outstanding debt obligations to the gas supply and power generation companies using partly cash payments and guaranteed debt instruments,” he said.

Adebalu had, last week, proposed a naira payment for gas sales to power plants as a solution to solve dollar shortages as costs are expected to balloon after a second currency devaluation in less than a year.

Natural gas is sold in dollars to power plants because investments tied to building gas processors and pipelines are priced and paid for in dollars.

Grid power is erratic in Nigeria, which also collapsed on February 4, causing a national blackout, and at least three times in 2023, which the authorities blamed on technical problems.

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