The Federal Government of Nigeria’s decision to pay N185 billion in long-standing debts to gas producers is expected to have several positive implications for the country’s energy sector and economy.
President Bola Ahmed Tinubu has authorised the settlement of ₦185 billion in long-standing debts owed to natural gas producers.
The move, endorsed by the National Economic Council (NEC) headed by Vice President Kashim Shettima, marked one of the most significant interventions in Nigeria’s energy sector in recent years.
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.
The payment, to be executed through a royalty-offset arrangement, 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 Petroleum Resources (Gas), Dr. Ekperikpe Ekpo, described the approval as a “decisive step towards revitalising Nigeria’s gas sector and strengthening its power-generation capacity in a sustainable manner.”
He praised President Tinubu’s leadership, noting that the intervention aligns with the Decade of Gas initiative, which aims to unlock more than 12 billion cubic feet per day (bcf/d) of gas supply by 2030.
Ekpo said clearing the arrears will deliver wide-ranging benefits, beginning with restoring investor confidence in the sector.
According to him, settling the debts is crucial to rebuilding trust between the government and gas producers, many of whom have withheld or slowed new investments due to uncertainty over payments.
Ekpo explained that improved financial stability will help revive upstream activity by accelerating exploration and production, ultimately boosting Nigeria’s gas output. Increased gas supply, he added, would also boost power generation and ease the long-standing electricity shortages that continue to hinder businesses across the country.
The Gas Minister noted that these gains are expected to stimulate broader economic growth, as reliable energy underpins industrialisation, job creation and competitiveness. He added that better fiscal discipline and enhanced transparency across the sector will further attract fresh investment from both local and foreign players.
Coordinating Director of the Decade of Gas Secretariat, Mr Ed Ubong, said the approved plan to clear gas-to-power debts sends a powerful signal of commitment from President Tinubu to address structural weaknesses across the 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. It could unlock stalled projects, revive investor interest and rebuild momentum behind Nigeria’s transition to a gas-driven economy,” said Ubong.
The payment will likely lead to increased gas supply to power plants, enhancing electricity generation and reducing persistent shortages. Settling the debts will rebuild trust between the government and gas producers, encouraging new investments and stimulating exploration activities.
Reliable energy supply will support industrialization, job creation, and competitiveness, driving broader economic growth.
The royalty-offset arrangement will promote transparency and fiscal discipline in the energy sector.
Overall, this decision is expected to revitalize Nigeria’s gas sector, strengthen power generation, and contribute to sustainable economic development
