The decision, personally directed by President Bola Tinubu and formally endorsed by the National Economic Council chaired by Vice President Kashim Shettima, was announced Thursday evening. Payment will be executed through a royalty-offset mechanism, allowing gas producers to deduct the owed amounts from future royalties due to the government instead of waiting for direct cash transfers.
Louis Ibah, spokesperson for the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, explained that the N185 billion represents “legacy debts” accumulated over several years. These unpaid bills have severely strained the cash flow of gas producers, discouraged new exploration and production, and led to deliberate cuts in gas supply to thermal power plants, the backbone of Nigeria’s electricity generation.
“The longstanding government obligations to gas producers for past supplies have hindered operations, discouraged further investment, reduced gas supply for power generation, and worsened Nigeria’s chronic power shortages and unreliable electricity supply,” Ibah said.
Minister Ekpo described the approval as a decisive turning point. “This is a bold step toward revitalising Nigeria’s gas sector and strengthening our power generation capacity in a sustainable manner,” he stated, praising President Tinubu’s leadership. He emphasised that clearing the arrears will rebuild trust with both domestic and international gas suppliers, many of whom had either slowed or completely halted new investments due to repeated non-payment.
Ekpo further linked the move to the administration’s Decade of Gas initiative, a national policy launched in 2021 that aims to unlock more than 12 billion cubic feet per day of gas supply by 2030. Reliable gas flow, he said, will directly translate into more megawatts on the national grid, easing the daily blackouts that force households and businesses to rely on expensive diesel and petrol generators.
Ed Ubong, Coordinating Director of the Decade of Gas Secretariat, welcomed the development as a clear demonstration of political will. “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,” he said. He added that settling these debts could unlock dozens of stalled upstream and midstream projects, revive investor interest, and accelerate Nigeria’s transition to a gas-driven economy.
The announcement has been met with cautious optimism across the industry. For years, major producers including Shell, ExxonMobil, Chevron, and the Nigerian National Petroleum Company Limited have publicly complained about billions of dollars in unpaid invoices. In some cases, companies have threatened to shut in production or exit the country entirely if the situation did not improve.
The debt crisis has created a vicious circle: power generation companies (GenCos) claim they cannot pay gas suppliers because the Nigerian Bulk Electricity Trading Plc (NBET) and distribution companies owe them trillions of naira for electricity already supplied. Gas producers, in turn, withhold supply when invoices remain unpaid, leading to lower electricity output and more frequent grid collapses.
By tackling the gas side of the equation first, the government hopes to break this cycle. Officials say the N185 billion injection will immediately improve liquidity for producers, enabling them to maintain pipelines, service rigs, and resume full-capacity supply to thermal plants that currently operate far below installed capacity due to gas shortages.
For ordinary Nigerians, the impact could be transformative. The country’s 220 million citizens currently share an average of just 4,000–4,500 megawatts of electricity — less than the output of a single medium-sized power plant in many developed nations. Factories shut down for hours daily, hospitals rely on generators, and millions of small businesses spend a significant portion of their revenue on fuel.
If the debt clearance leads to even a modest increase in gas supply, analysts say it could add several hundred megawatts to the grid within months, reducing load-shedding and easing the economic burden of unreliable power.
The approval comes amid broader efforts by the Tinubu administration to reform the energy sector. Recent measures include a N4 trillion bond framework to refinance historic debts owed to GenCos, tax incentives for deepwater gas projects, and stricter enforcement of domestic gas supply obligations under the Petroleum Industry Act.
While challenges remain — including pipeline vandalism, aging infrastructure, and lingering mistrust between market participants — Thursday’s announcement is being seen as the strongest signal yet that the government is serious about turning Nigeria’s abundant natural gas resources into reliable electricity for its people.
As Minister Ekpo put it: “Reliable energy is the foundation of industrialisation, job creation, and economic competitiveness. Today, we have taken a giant step toward delivering that future.”
