During the 2024 Nigeria International Energy Summit (NIES) in Abuja, Ed Ubong, Director of the Decade of Gas Secretariat, announced that the federal government has made a significant payment to clear part of the outstanding debts owed to electricity generation companies (GenCos) in Nigeria’s gas sector. He revealed that between October 2023 and January 2024, over $120 million had been paid to help reduce the arrears.
“The outstanding debts to gas producers amounted to approximately $1.3 billion as of last year. However, I’m pleased to report that we’ve successfully paid over $120 million in the past few months,” Ubong stated during his address at the summit.
Ubong highlighted that the government is working on a comprehensive plan aimed at settling the remaining debts. “The government is developing a framework to address and liquidate most of the outstanding debts. This ongoing initiative is critical to resolving legacy financial challenges in the sector,” he added.
He also emphasized the importance of collaboration between the government and key stakeholders in the oil and gas industry to stabilize the sector and meet rising global demand. He noted that substantial gas reserves remain untapped, particularly around the OB3 gas pipeline. “There is an estimated 300 to 600 million scuffs of gas in the region that will become accessible once the OB3 pipeline is completed,” Ubong explained.
Ubong also mentioned the broader infrastructure projects underway, including the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline, which will significantly expand the country’s gas distribution capacity. “Once the OB3 pipeline is completed, over 600 million scuffs of gas will be available, which will greatly enhance our national gas network.”
Ubong stressed the need to develop a skilled workforce for the sector, noting the critical role of engineers and technicians in supporting the growing gas industry. He encouraged youth and professionals interested in the sector to join the Decade of Gas Secretariat’s initiatives.
In a similar vein, Akachukwu Nwokedi, President of the Nigerian Gas Association (NGA), also addressed the summit, calling for the adoption of preventive measures to ensure that the sector avoids accumulating further debt in the future. Nwokedi acknowledged the positive steps taken to settle the existing debts, but stressed the importance of putting in place effective policies to prevent future financial challenges.
“While we applaud the clearance of over $120 million in debt, it is essential that we focus on establishing the right policies and mechanisms to avoid this issue in the future,” Nwokedi stated. He argued that a more harmonized approach is needed to encourage investment and create a conducive business environment in the gas sector.
Nwokedi also pointed to best practices from countries like Australia, where policies have been deliberately designed to attract Foreign Direct Investment (FDI) into the gas sector. He stressed the need to simplify tax systems and reduce unnecessary levies, which can erode profits and discourage new and existing businesses from entering or staying in the sector.
