Economy

Nigerian government pays $120m from gas debts as blackout spreads

Published

2 months ago

March 1, 2024

The Nigerian government has paid $120m out of the $1.3bn indebtedness to gas companies for the supply of gas to run gas-fired power plants across the country.

The government said the measure was to address the indebtedness of the country’s power sector to electricity-generating companies (GenCos) and the gas companies (GasCos).

The Director of Decade of Gas Secretariat, Ed. Ubong, disclosed this at the ongoing 7th Edition of the Nigeria International Energy Summit (NIES 2024) yesterday in Abuja.

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

He said,

“the arrears gas producers are owed as at last year was about $ 1.3 billion. 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.”

Earlier, the Minister of Power, Adebayo Adelabu, had noted that the total debt owed to power generating companies was N1.3 trillion, out of which 60 per cent was owed to gas suppliers.

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

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

he said.

“That is 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 capacity for gas. 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 then 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,”

Also speaking, the NGA President and General Counsel and Company Secretary, Nigeria LNG, Akachukwu Nwokedi, argued that huge debts on the books could erode investor confidence in greenfield investments in upstream and on critical infrastructure.

“We therefore recognise that there have been steps to clear the debts and I’m happy to hear that $120 million has already been cleared. But for us in NLNG, it’s not just clearing the debts, it is putting in place policy mechanisms that will prevent reoccurrence,” he added.