The Federal Government has approved the payment of N185bn owed to natural gas producers, a major step officials say will help revive the gas sector and improve electricity generation nationwide.
Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, confirmed the development on Thursday, explaining that President Bola Tinubu endorsed the repayment plan after it was presented at the National Economic Council meeting chaired by Vice President Kashim Shettima.
According to Ekpo, the unpaid obligations had accumulated over several years, weakening the financial position of gas suppliers, slowing new investments, and reducing gas deliveries to power plants. The resulting shortfall in supply has been one of the key factors behind Nigeria’s long-running electricity shortages.
He said the settlement will be carried out through a royalty-offset arrangement designed to ease the financial burden on the government while allowing producers to recover their outstanding dues.
Ekpo described the approval as a turning point for the industry, noting that it aligns with the government’s “Decade of Gas” agenda, which targets an ambitious scale-up of gas output to support power generation, industrial development, and economic growth.
“Clearing these arrears will restore confidence and encourage producers to ramp up exploration and production activities,” he said, adding that improved gas supply to power plants will help raise generation levels, which have hovered around 5,000 megawatts in recent months.
The Coordinating Director of the Decade of Gas Secretariat, Ed Ubong, said the move sends a strong signal that the government is serious about fixing structural bottlenecks in the gas value chain. He noted that the payment could unlock stalled projects and attract new investments from both local and international operators.
Gas producers had previously halted supply to power plants in 2024 over the unpaid debts, an action that deepened power shortages across the country. Industry players expect the newly approved settlement to ease those tensions and provide a more stable foundation for energy planning going forward.
Officials say the intervention will not only strengthen the gas market but also support broader economic activities that depend on reliable electricity, including manufacturing, services, and small businesses.
