The country faces an imminent electricity blackout as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has directed gas producers to halt supply of gas to indebted generation companies (GenCos).
In an X (formerly Twitter) post on its official account on Wednesday, the Nigeria National Grid revealed that NMDPRA’s directive to halt gas supply to GenCos is due to the over N2 trillion debts that the Federal Government and some GenCos owe gas producers in Nigeria.
The tweet pointed out that NMDPRA stated that the substantial debts owed to producers had hindered their ability to sustain operations.
“An electricity blackout is imminent following the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s directive to gas producers to cease supplying gas to indebted generation companies (GenCos).
“NMDPRA stated that the substantial debts owed to producers had hindered their ability to sustain operations. It called on gas off-takers, particularly power generation companies, to ensure timely payment for the gas supplied.
“The federal government and some GenCos currently owe over N2 trillion in legacy debts to gas producers in Nigeria,” the tweet read.
While the Federal Government has in the past few months paid some of its debt owed to the GenCos, more is needed to enable the sustenance of the ecosystem.
What you should know
Nigeria’s power sector continues to grapple with challenges despite multiple government interventions, particularly due to the underinvestment and lack of liquidity in the system.
- In June 2024, the Power Generation Companies (GenCos) urged the Federal Government to settle outstanding electricity debts to ensure their continued operation. They warned that the non-payment of over N2 trillion could jeopardize the sustainability of electricity generation for Nigerians.
- The Federal Government, through the Minister of Power, Adebayo Adelabu, in August, announced that it has settled N205 billion out of the N1.3 trillion owed to Generation Companies (Gencos) in a bid to improve liquidity in the power sector.
- Adelabu had noted that the payment was part of the debt owned by the government to the different segments of the power companies.
- In May, the federal government announced the sum of N130 billion to settle part of the N1.3 trillion gas supply debts in the Nigerian Electricity Supply Industry (NESI).
This ongoing debt settlement effort is part of the government’s attempt to increase liquidity in the sector, and by extension, guarantee an increase in power supply.
However, gas off-takers, particularly power generation companies, are urged to ensure timely payment for the gas supplied.
