Explanation: The Nigerian government moves to clean up ₦ 2.7tn gas debt through royalties

The federal government has announced plans to compensate for 2.7 trillion debt owed to the gas company by utilizing royalty loans.

The Head of the Nigerian Hulu Oil Regulation (NUPRC) Executive Commission, GBENGA KOMOLAFE, revealed this on Thursday during a virtual meeting organized by the Minister of State for Oil Resources (Gas), Ekpo Experikpe, to mark their second year in the office.

Komolafe, represented by Dennis Anyanwu, explained that because most gas producers pay royalties to the government, discussions are ongoing to allow debt for gas supplied to power plants to be extinguished through offset royalties.

“One of the solutions investigated is the blackout of inheritance through royalty credit. You might note that most of the companies owed are gas producers; they pay royalties on gas. he said.

He added that the commission guided the government to implement mechanisms without disrupting industrial operations or government income flows.

React to the proposal, Chairman of the Renaissance Africa Energy, Layi Fatona, described the plan as “brave and very clear in his intention.”

In June, the independent oil producer group, led by its chairman, Abdulrazaq Isa, had requested the government to complete an increase in inheritance debt, the warning of the impact on the gas supply to the electricity sector. In December 2024, the federal government and power generation companies owed gas producers of more than 2.7 trillion.

Previously in 2024, several gas companies stopped supply to power generation companies due to unpaid bills, triggered a week of national power shortage.