The Federal Government of Nigeria has approved the payment of ₦185bn ($127.5m) to natural gas suppliers of gas-fired power plants in its latest move to clear power sector debts.
The move is aimed at easing liquidity constraints in the sector and improving electricity generation in the country’s beleaguered power industry.
In a statement, Nigeria’s Minister of State for Petroleum Resources, Ekperikpe Ekpo, said the long-standing debts had weakened cash flow for producers, slowed sector investments, and limited gas deliveries to power plants.
“The payment, to be executed through a royalty-offset arrangement, is expected to restore confidence among domestic and international gas suppliers who have long expressed concern about persistent indebtedness in the sector,” the statement read.
Minister Ekpo said the intervention aligns with the Decade of Gas initiative, which aims to unlock more than 12 billion cubic feet per day of gas supply by 2030.
Among its power sector troubles, the Nigerian government is owing generation companies (GenCos) billions in unpaid electricity generation bills.
Earlier this year, the government approved a refinancing scheme for a ₦4trn ($2.7bn) debt owed to GenCos.
Despite this huge debt clearance approval, a recent report reveals that Nigerian manufacturers still spent an estimated ₦676.6bn on power generators in the first half of 2025 because of poor supply to their factories.