The Federal Government is working on a plan to clear the N2.7 trillion it owes gas producers by using royalty payments as settlement.

This was disclosed by the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, during a virtual meeting hosted by the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, to mark his second year in office.

Under the plan, gas companies that supply power plants—many of whom are owed billions—will have their outstanding debts balanced against the royalties they are required to pay to the government. Komolafe explained that the NUPRC is helping design a framework that will address the debt problem while ensuring government revenues are not disrupted.

Industry players have welcomed the idea. Renaissance Africa Energy Chairman, Layi Fatona, praised the move but urged the government to implement it quickly so producers can regain stability.

As of December 2024, unpaid bills to gas producers had reached N2.7 trillion, leading some firms to cut supply to power plants earlier this year and worsening nationwide blackouts.

Minister Ekpo said gas is key to Nigeria’s energy future and economic growth, adding that the Tinubu administration has laid a foundation for reforms and investments to boost the sector.

The government is expected to hold further talks with producers on how the royalty credit system will be applied.