The Federal Government has commenced the settlement of ₦185 billion in long-standing debts owed to natural gas producers, following approval by President Bola Tinubu as part of efforts to revive the gas industry and stabilise power supply.
The decision, ratified on Wednesday by the National Economic Council (NEC) chaired by Vice-President Kashim Shettima, represents one of the most far-reaching policy moves in Nigeria’s energy sector in recent years.
In a statement on Thursday, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, said the clearance of the arrears would restore investor confidence and ease long-standing operational challenges in the sector.
The legacy debts, accumulated over several years for gas supplied to power plants, had weakened cash flow for producers, discouraged new investments and constrained gas supply, worsening Nigeria’s persistent electricity shortages.
Under the approved arrangement, the debts will be settled through a royalty-offset mechanism. The government expects this to reassure both local and foreign gas suppliers who have repeatedly raised concerns over unpaid obligations.
Describing the move as a “decisive step” toward strengthening Nigeria’s gas sector, Mr Ekpo said it aligns with the federal government’s Decade of Gas initiative, which targets over 12 billion cubic feet of gas supply per day by 2030.
He noted that clearing the debts would rebuild trust between the government and producers, many of whom had slowed exploration and production due to payment uncertainties.
According to him, improved financial stability in the sector would accelerate upstream activities, boost gas output and enhance power generation capacity, easing electricity shortages that continue to affect businesses nationwide.
Mr Ekpo also said the expected growth in reliable energy supply would support industrialisation, job creation and overall economic competitiveness, adding that stronger fiscal discipline and transparency would attract further investment.
Also speaking, the Coordinating Director of the Decade of Gas Secretariat, Ed Ubong, said the approval to settle gas-to-power debts reflected President Tinubu’s commitment to addressing structural challenges across the energy value chain.
He said the move could revive stalled projects, restore investor confidence and renew momentum toward Nigeria’s transition to a gas-based economy.
