Despite a longstanding debt of over ₦2.7 trillion, Nigeria’s gas producers supplied power generation companies with approximately 179.79 billion standard cubic feet (Bscf) of gas between January and July 2025. The gas, valued at around ₦607 billion, was delivered even as the companies await payment from the Federal Government and generation companies (GenCos).
The figures are detailed in a report released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which noted that gas deliveries to the power sector hit a three-month high in July, rising by 3.48% month-on-month from 833.86 million standard cubic feet per day (mmscf/d) in June to 862.86 mmscf/d in July.
Gas Supply Trend (January–July 2025)
The report shows a fluctuating trend in daily average gas supply to the power sector:
- January: 780.23 mmscf/d (24.19 Bscf)
- February: 849.37 mmscf/d (23.78 Bscf)
- March: 886.83 mmscf/d (27.49 Bscf)
- April: 886.70 mmscf/d (26.60 Bscf)
- May: 837.64 mmscf/d (25.96 Bscf)
- June: 833.86 mmscf/d (25.02 Bscf)
- July: 862.86 mmscf/d (26.75 Bscf)
The total supply over the seven-month period converts to 186.26 million MMBtu (Million British Thermal Units), based on conversion data from the U.S. Energy Information Administration, which pegs 1 cubic foot at 1,036 BTU.
Using the regulated gas-to-power price of $2.13/MMBtu set by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 179.79 Bscf is worth $396.74 million which translates to ₦607 billion at an exchange rate of ₦1,530 to the dollar.
Supply Continues Despite Debts
Power plants, particularly thermal stations, remain the largest consumers of domestic gas, even as many GenCos are heavily indebted to gas suppliers. One major power plant is reported to owe an international oil company over ₦500 billion in unpaid gas bills.
However, GenCos maintain that they are unable to settle gas debts until the Federal Government clears its estimated ₦5 trillion debt owed to the power generation companies.
FG Proposes Royalty Offset to Settle Debts
In a move to address the mounting liabilities, the Federal Government is considering an innovative approach to extinguish the legacy debt: royalty credits. According to NUPRC Chief Executive, Gbenga Komolafe, discussions are ongoing to offset debts owed to gas producers through the gas royalties those same companies pay to the government.
Speaking during a virtual meeting hosted by the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, Komolafe explained that most gas-producing companies are active royalty payers, making this model feasible.
“One of the solutions that has been canvassed is the extinguishment of the legacy debt through royalty credits,” he said.
“We are providing guidance to ensure the mechanism is implemented in a way that doesn’t disrupt industry operations or government revenue flow.”
Komolafe emphasized that the commission’s role involves offering data, production assessments, and expert advice on royalty-related matters to ensure a smooth and balanced resolution.
Industry Voices Call for Urgent Reforms
Former Minister of Power and Chairman of Geometric Power, Barth Nnaji, expressed concern over Nigeria’s failure to utilize its over 200 trillion cubic feet of proven gas reserves to adequately power its national grid.
“It’s quite perplexing. We are a gas-rich country, yet we struggle to supply enough gas to our power plants,” he said during an event in Lagos.
Nnaji also highlighted the pricing gap between the regulated rate of $2.13/MMBtu and market realities, where gas is often sourced at $2.70/MMBtu or more due to supply constraints.
This disparity, he said, is worsening the liquidity crisis in the power sector. It’s also one of the drivers behind the ₦1 trillion in electricity subsidies recorded in the first half of 2025, as GenCos are forced to sell power below production cost.
“The current pricing model is not sustainable,” Nnaji warned. “It leaves power producers exposed and deepens the debt trap.”
