N639bn Gas Debt Threatens Nigeria’s Electricity Supply

Nigeria’s electricity supply crisis could worsen unless the Federal Government addresses mounting debts in the power sector, inadequate investment in gas production and weaknesses in transmission infrastructure.

Industry stakeholders raised the concerns at the sixth annual conference of the Power Correspondents Association of Nigeria in Abuja, warning that the absence of a reliable payment system for gas suppliers was affecting electricity generation.

They also identified poor commercial arrangements and insufficient investment as major obstacles to achieving stable and affordable power supply, a key requirement for Nigeria’s ambition to build a $1tn economy by 2030.

The concerns follow recent disruptions to electricity supply across the country. On November 5, the Nigerian Independent System Operator attributed reduced national grid generation to insufficient gas supply to thermal power plants and lower water inflows into hydroelectric reservoirs. The situation resulted in shorter electricity supply hours and increased load shedding.

However, the Nigerian National Petroleum Company Limited later stated that its gas transportation network remained available, explaining that gas production, commercial supply arrangements and actual deliveries to power plants were separate issues that needed to be examined.

Speaking at the conference, the General Manager of Gas Commercial at the Nigerian National Petroleum Development Company, Bashiru Adoke, said the challenges affecting gas supply to power plants could be resolved through sustained investment and a dependable payment structure.

He identified the inability of electricity market operators to pay gas suppliers as one of the major problems affecting generation companies.

According to him, power generation companies receive insufficient payments for the electricity they produce, leaving them unable to settle their gas bills and maintain consistent supplies.

Adoke explained that gas accounts for between 60 and 75 per cent of electricity generation costs, while payments received by generating companies cover only about 40 per cent of the energy supplied.

He disclosed that outstanding payments owed to the power sector had exceeded N630bn, warning that the situation would continue to undermine electricity generation without a sustainable settlement arrangement.

The official also cautioned that periodic government interventions to clear outstanding debts would not resolve the crisis if new liabilities continued to accumulate.

He explained that the government’s intervention programme covered legacy debts incurred between 2015 and 2025, while fresh obligations arising from 2025 onwards were already building up without adequate attention.

Adoke further called for increased investment in non-associated gas production, noting that dependence on gas produced alongside crude oil could expose electricity generation to disruptions whenever oil production declined.

Although the Federal Government had introduced incentives through executive orders to attract investment into gas projects, he said additional funding was needed to expand production.

He also expressed concern that high electricity tariffs could encourage more consumers to abandon the national grid in favour of solar energy and other independent power sources, raising questions about the grid’s long-term sustainability.

Meanwhile, the General Manager of Engineering at the Transmission Company of Nigeria, Mojeed Akintola, identified inadequate electricity generation as a major limitation to the company’s operations.

He explained that TCN could only transmit the electricity produced by generating companies, adding that the company was increasing its capacity through the installation of new transformers and construction of transmission lines.

However, he identified disputes over rights of way and vandalism as major challenges delaying the completion of transmission projects.

The stakeholders maintained that addressing the financial and infrastructure problems across the gas and electricity value chains would be necessary to improve power supply nationwide.