Federal Govt Pays $120m Gas Debt To Boost Power Generation

The federal government says it has paid over $120 million to offset part of the debts owed to gas companies (GasCos) for electricity generation.

This was disclosed by Ed. Ubong, the director of the Decade of Gas Secretariat, at the ongoing 7th edition of the Nigeria International Energy Summit (NIES 2024) in Abuja on Thursday.

According to him, the government is also working on a framework to curb most of the failures in the system.

He said, “The arrears gas producers are owed as of last year was about $ 1.3billion. But I am pleased that between October 2023 and the end of January, the government has paid over $120 million to offset some of that money.”

This follows the effort of the government to address the indebtedness of the country’s power sector to electricity-generating companies (GenCos) and gas companies (GasCos), as earlier announced by Adebayo Adelabu, the minister of power.

The minister noted that the total debt owed to power-generating companies was N1.3 trillion, out of which 60 percent is owed to gas suppliers.

The Transmission Company had also attributed the recent decline in power supply to a decrease in available generation into the grid due to gas constraints.

It stated that the gas constraints impacted the quantum of bulk power available on the transmission grid for onward transmission to the distribution load centres nationwide.

Ubong, however, noted that the government was working on a framework to mitigate most of that failure.

“That’s a piece of work that is ongoing and we hope that it will be approved and then the industry can move away from that legacy issue.

“We must build a gas capacity. The engineers, the technicians that will work in this new gas sector that we are looking at for the next eight months. And at the Secretariat, we are committed to that. We are looking for interns, we are looking for young people who are willing to join us and provide their time and energy to support the wider and bigger goals of the sector.

“For the first time, we now have a ministerial committee that involves the minister of state for gas and the ministry of power. Because power and gas go together, we are confident that when that becomes fully operational, that critical link between gas and power will lead to more sustainable solutions going forward,” he said.

Akachukwu Nwokedi, president, Nigerian Gas Association, said that the legacy debt owed to players in the electricity value chain was among the factors eroding investors’ confidence and investments. He stressed the need for policies to boost sector growth and attract investments.

He urged that regulation should be positioned primarily as enablers to business, especially recognising the new reality in the country.

“We, therefore, recognise that there have been steps to clear the debts and I’m happy to hear that over $120 million had already been cleared,” he added.