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Gas industry stakeholders warn that more than N630bn owed by the electricity market is undermining payments to suppliers and threatening generation.
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Gas accounts for 60 to 75 percent of power generation costs, while generators receive only about 40 percent of the value of electricity supplied, according to an industry official.
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Stakeholders call for a sustainable payment mechanism, increased investment in gas production and improvements to transmission infrastructure.
November 13, (THEWILL) – Nigeria’s electricity supply could remain unstable unless the Federal Government addresses mounting debts in the power sector, inadequate investment in gas production and weaknesses in transmission infrastructure, industry stakeholders have warned.
They said the failure to establish a reliable payment mechanism for gas suppliers was weakening operators’ ability to sustain deliveries to thermal power plants. Inadequate transmission infrastructure has also continued to constrain electricity supply.
The concerns were raised at the sixth annual conference of the Power Correspondents Association of Nigeria in Abuja.
Stakeholders examined the financial and structural challenges facing the electricity industry and their implications for Nigeria’s ambition to build a $1tn economy by 2030.
The warning comes amid renewed electricity disruptions across the country.
On November 5, the Nigerian Independent System Operator attributed a decline in national grid generation to inadequate gas supply to thermal power stations and reduced water inflows into hydroelectric reservoirs.
The development resulted in shorter electricity supply hours and increased load shedding.
The Nigerian National Petroleum Company Limited subsequently said its gas transportation network remained available.
It argued that gas production, commercial supply arrangements and actual deliveries to power stations should be examined separately.
General Manager, Gas Commercial, Nigerian National Petroleum Development Company, Bashiru Adoke. Photo credit: NNPC.
Unpaid debts undermine gas supply
Speaking at the conference, the General Manager, Gas Commercial, Nigerian National Petroleum Development Company, Bashiru Adoke, said the gas-to-power crisis could be resolved but would require sustained investment and a dependable payment structure.
He identified the inability of electricity market operators to pay for gas supplied to generating companies as one of the biggest obstacles to stable power generation.
Adoke said proceeds received by generating companies were insufficient to cover their gas bills, leaving suppliers exposed to mounting receivables.
“There is no robust mechanism for payment of gas supply, because the proceeds from the market are not even enough to pay for gas supply.
“If you see the invoice monthly for energy generated, it is about 40 per cent and the gas takes about 60-75 percent of production cost.
“The money is not even enough. That’s why you see today, the market owes us over N630bn for power generated and consumed by Nigerians.
“We should try to establish a robust mechanism for payment of gas or else we would continue to have problems. The government intervention every three or four months won’t solve the issues,” he said.
He warned that periodic government interventions to settle outstanding liabilities would not resolve the problem if new debts continued to accumulate.
According to him, the government’s intervention in legacy debts covers obligations accumulated between 2015 and 2025, leaving more recent liabilities unresolved.
“The intervention by the government, which is on the legacy debt, is from 2015 to 2025. What about the debt from 2025? It is already accumulating and it is not being addressed. It is a problem,” he added.
Adoke also called for increased investment in non-associated gas, which is produced independently of crude oil.
He argued that greater reliance on associated gas could expose electricity generation to disruptions in oil production.
Although the government has introduced incentives through executive orders to encourage investment in gas projects, he said more capital was needed to expand production and improve supply to the power sector.
He also expressed concern that high electricity tariffs could encourage more consumers to abandon the national grid for solar power and other forms of self-generation, potentially weakening the grid’s long-term commercial viability.
“I am scared for this national grid because by the time everybody abandons it and uses solar, I don’t know what the grid will be doing,” he said.
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Transmission constraints compound power crisis
Meanwhile, the General Manager, Engineering, Transmission Company of Nigeria, Mojeed Akintola, said inadequate generation remained a major constraint to the transmission network.
He noted that the company could only evacuate the electricity produced by generating stations.
Akintola said TCN was expanding its transmission capacity through the installation of new transformers and construction of additional transmission lines.
However, he identified right-of-way disputes and vandalism as major obstacles delaying infrastructure projects.
The concerns highlight the interconnected challenges facing Nigeria’s electricity industry.
Insufficient gas supply and unpaid obligations constrain generation, while limitations in transmission infrastructure restrict the amount of electricity that can be delivered to consumers.
Stakeholders said resolving the crisis would require coordinated investment across the gas and electricity value chains, alongside a payment system capable of ensuring that suppliers and operators receive payments for services delivered.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.