Federal Government Approves N185 Billion to Clear Gas Debts and Boost Power Supply

In a major step aimed at stabilising Nigeria’s struggling electricity sector, the Federal Government has approved N185 billion to offset a portion of longstanding gas debts owed to gas supply companies. The move, announced after a high-level energy sector meeting in Abuja, is expected to significantly improve gas availability to power plants, stabilise national grid performance, and reduce the frequent nationwide blackouts that have persisted for months.

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The approval marks one of the clearest interventions by the government to address the persistent liquidity challenges undermining power generation and distribution. According to senior officials at the Ministry of Power, the funds will be disbursed under a phased payment arrangement targeted at gas producers who supply thermal power stations across the country.

Why the Payment Became Urgent

Nigeria relies heavily on gas-fired plants for its electricity, with more than 70% of national power generation coming from thermal stations. However, years of unpaid bills by electricity generation companies (GenCos), worsened by shortfalls in revenue across the electricity value chain, left gas producers increasingly reluctant to supply gas without upfront payment guarantees.

The resulting shortage of gas led to repeated drops in power generation, with grid output sometimes falling below 3,000MW—far lower than what is required to serve the country’s population and industries. Officials noted that the liquidity crisis had pushed some gas suppliers to scale down deliveries, further crippling GenCos’ ability to produce power.

By clearing a significant portion of the debt, the government hopes to restore confidence among gas producers and incentivise full resumption of gas supply to plants.

A Boost to the National Grid

A senior official in the Federal Ministry of Power said the N185 billion payment will immediately unlock gas supply to critical power plants such as Geregu, Omotosho, Olorunsogo, Ihovbor, and Egbin.

“The approval is a strategic intervention to stabilise generation. Once the gas flows improve, Nigerians should begin to see more consistent electricity hours,” the official said.

The Transmission Company of Nigeria (TCN) also welcomed the payment, stating that improved generation would reduce the pressure on the national grid and help prevent collapses that often occur when supply drops sharply.

Industry Reaction

The Nigerian Electricity Regulatory Commission (NERC) described the decision as a necessary step toward restoring sector confidence. Gas supply companies, under the Gas Aggregation Company of Nigeria (GACN), also commended the government, noting that the debt repayment would “reset strained commercial relationships” between gas suppliers and GenCos.

Power sector analysts say the intervention is long overdue. According to them, the persistent shortage of gas had turned into one of the biggest threats to Nigeria’s energy stability. By clearing part of the arrears, the government is addressing a critical bottleneck in the sector.

However, experts warn that the payment will only serve as a temporary measure unless broader structural reforms are implemented. These include addressing electricity tariff shortfalls, curbing technical losses, and ensuring discos remit revenues adequately.

Link to Ongoing Power Sector Reforms

The N185 billion clearance is also part of the government’s broader power sector recovery plan, which includes:

• Improving gas supply reliability through better contractual enforcement
• Expanding transmission capacity to accommodate higher generation
• Accelerating metering to reduce estimated billing and boost revenue
• Reviewing electricity tariffs to reflect actual market costs while protecting vulnerable consumers

The government has maintained that stabilising power supply remains critical to reviving industrial production, creating jobs, and reducing reliance on expensive diesel generators.

Impact on Households and Businesses

Millions of households across Nigeria have endured unstable power supply in 2024 and 2025 due to gas shortages, weak grid infrastructure, and the financial struggles of electricity companies. Businesses—especially manufacturers, hotels, and small-scale enterprises—have repeatedly complained about rising operational costs due to dependence on generators.

With the gas supply expected to improve after the debt clearance, consumers are hoping for longer and more predictable power hours.

A Lagos-based manufacturer told reporters, “If power improves even by 30%, it will reduce diesel expenses significantly. Many of us spend millions monthly on fuel.”

Government’s Long-Term Outlook

The Federal Government has reiterated its commitment to achieving at least 6,000MW of stable electricity generation before the end of the current administration. Officials believe the latest intervention is a major step toward that goal.

The Minister of Power stated that clearing the gas debts demonstrates the administration’s resolve to address root causes of power shortages rather than offering temporary fixes. He added that this payment will be followed by additional measures aimed at ensuring long-term energy sustainability.

Conclusion

The approval of N185 billion to settle gas debts represents a major financial commitment by the Federal Government to revive the electricity sector. While it is not a complete solution to Nigeria’s power challenges, it is expected to immediately stimulate gas supply, increase power generation, reduce blackouts, and restore confidence across the sector. As Nigerians look forward to tangible improvements in electricity supply, the coming months will test the effectiveness of this intervention and the government’s broader energy reform agenda.