By Safiyat Muhammed | Nigeria News Today
ABUJA — The Federal Government has announced plans to offset the ₦2.7 trillion legacy debt owed to gas companies by leveraging gas royalty credits, a move aimed at stabilising Nigeria’s power and energy sector.
The disclosure was made on Thursday by Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), during a Zoom meeting organised by the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, to mark his second year in office.
Royalty Credits as Debt Solution
Royalties are payments oil and gas firms remit to the Federal Government for resource extraction. Under the new plan, debts owed to gas producers for supplies to power plants will be settled using the royalties those same companies owe the government.
Komolafe, represented by Dennis Anyanwu, explained that discussions with key stakeholders are ongoing to structure the arrangement.
“One of the solutions canvassed is the extinguishment of the legacy debt through royalty credits. Since most of the companies owed are also royalty-paying gas producers, the proposal is to offset what they are owed with their royalty obligations,” he said.
He stressed that the NUPRC is working to ensure the model does not disrupt government revenue.
Industry Reactions
Reacting to the initiative, Dr. Layi Fatona, Chairman of Renaissance Africa Energy, praised the proposal, describing it as “bold and clear in intention.” However, he urged the regulator to prioritise speed in rolling out the mechanism, warning that delays could further strain gas producers.
Earlier in June, the Independent Petroleum Producers Group (IPPG) had urged the Federal Government to address the legacy debt, warning that mounting arrears had already forced several gas producers to halt supply to power generation companies. This action plunged parts of Nigeria into prolonged blackouts earlier in 2024.
Minister Reaffirms Gas as Nigeria’s Future
Minister of State for Gas, Ekperikpe Ekpo, reaffirmed the government’s commitment to reforming the sector under President Bola Tinubu’s leadership.
“Gas is central to our energy security, industrialisation, and role in the global energy transition. We must translate today’s insights into practical commitments,” Ekpo said.
He assured stakeholders that the administration would continue creating an enabling environment to attract local and foreign investment, describing gas as a “catalyst for Nigeria’s prosperity.”
The Bigger Picture
As of December 2024, the Federal Government and power generation firms owed gas producers over ₦2.7 trillion in legacy debts. With the introduction of royalty credits, industry experts believe Nigeria could restore confidence among investors and ensure more consistent gas supply to its ailing power sector.
