Federal Govt Begins N185bn Gas Legacy Debt Repayment

The federal government, said on Thursday, it had  begun the repayment of N185 billion in legacy debts owed to gas producers, following the endorsement by the National Economic Council (NEC).

The minister of state for Petroleum Resources (Gas), Dr Ekperikpe Ekpo, who made this known yesterday, said the repayment move adopted  a royalty-deduction arrangement to settle the longstanding obligations and enhance domestic gas supply for power generation.

Recall that the repayment plan was on Wednesday endorsed by the NEC, headed by Vice President Kashim Shettima.

President Bola Ahmed Tinubu had authorised the settlement of N185 billion in long-standing debts owed to natural gas producers to revitalise the gas industry and stabilise power generation.

Ekpo, described the approval as a “decisive step towards revitalising Nigeria’s gas sector and strengthening its power-generation capacity sustainably.”

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 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.

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.

Also commenting on the development, the coordinating director of the Decade of Gas Secretariat, 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.