Nigeria’s power crisis deepens as ₦639bn unpaid gas debt threatens electricity supply

Nigeria’s electricity supply faces renewed uncertainty as outstanding debts of more than ₦639 billion in the gas-to-power market threaten the ability of gas suppliers to sustain deliveries to power generation companies.

Industry stakeholders have warned that the absence of a reliable payment mechanism, inadequate investment in gas production and persistent financial challenges across the electricity value chain could worsen the country’s power crisis.

The warning was raised at the sixth annual conference of the Power Correspondents Association of Nigeria in Abuja, where stakeholders discussed the financial and structural challenges affecting electricity generation and distribution.

Bashiru Adoke, General Manager, Gas Commercial, at the Nigerian National Petroleum Development Company (NNPDC), said the inability of electricity market operators to pay for gas supplied to generating companies remained one of the biggest obstacles to stable electricity generation.

According to Adoke, the electricity market owes gas suppliers more than ₦639 billion for electricity already generated and consumed by Nigerians.

He explained that gas accounts for between 60 and 75 per cent of the production costs of electricity, while payments received by generation companies are insufficient to cover their obligations to gas suppliers.

Adoke said monthly payments for energy generated represented only about 40 per cent of the corresponding invoices, leaving operators struggling to settle their gas bills.

He warned that repeated government interventions to clear accumulated debts would not resolve the problem unless a sustainable payment arrangement was established.

The NNPDC official also criticised the practice of relying on periodic government bailouts to settle outstanding obligations, arguing that fresh debts continue to accumulate even when historical liabilities are addressed.

He noted that the government’s intervention programme covering legacy debts accumulated between 2015 and 2025 did not resolve obligations arising from subsequent electricity transactions.

Adoke called for increased investment in non-associated gas production, explaining that excessive reliance on associated gas, which is produced alongside crude oil, could expose electricity generation to disruptions whenever oil production declines.

He also expressed concern that high electricity tariffs could push more consumers towards solar energy and independent power generation, potentially weakening the national grid.

Nigeria’s electricity payment system involves several interconnected operators, with financial difficulties at one stage affecting the entire supply chain.

Under the market arrangement, the Nigerian Bulk Electricity Trading Plc (NBET) purchases electricity from generation companies (GenCos), while distribution companies (DisCos) are responsible for delivering electricity to consumers and collecting payments.

The revenue collected through the market is expected to flow back through the system, enabling generation companies to meet their operational expenses, including payments to gas suppliers.

However, when distribution companies fail to remit sufficient payments, or government subsidy obligations remain outstanding, generation companies receive less money than they are owed.

This limits their ability to settle invoices for gas supplied to their power plants, creating outstanding debts for gas producers.

The Nigerian Electricity Regulatory Commission (NERC), in its 2024 annual report, identified underpayments by distribution companies and unpaid government subsidy obligations as major contributors to liquidity challenges affecting generation companies.

The commission also highlighted inadequate gas infrastructure and ineffective gas supply agreements as factors undermining electricity generation.

The latest ₦639 billion warning comes amid broader concerns about unpaid obligations across Nigeria’s gas-to-power industry.

In October 2026, the Managing Director of Nigeria LNG Limited, Leye Falade, disclosed that gas suppliers to power plants were owed approximately ₦3.3 trillion.

Falade warned that unpaid invoices were discouraging investment and threatening domestic gas supply despite Nigeria’s substantial natural gas reserves.

The Federal Government has also introduced measures to address historical debts in the electricity market.

In April 2026, President Bola Tinubu approved a ₦3.3 trillion payment plan for verified legacy electricity-sector debts accumulated between February 2015 and March 2025.

Subsequently, the government raised approximately ₦728.98 billion through the second series of bonds under its Power Sector Multi-Instrument Issuance Programme to support the settlement process.

These figures represent different categories and periods of outstanding obligations and should not be added together as though they are separate, independently verified debts.

The financial difficulties are occurring against the backdrop of recurring electricity supply disruptions across the country.

On November 5, 2026, the Nigerian Independent System Operator attributed a decline in national grid generation partly to inadequate gas supplies to thermal power stations and reduced water inflows into hydroelectric reservoirs.

The situation resulted in shorter electricity supply hours and increased load shedding in parts of the country.

However, the Nigerian National Petroleum Company Limited subsequently maintained that its gas transportation network remained available, arguing that gas production, commercial supply arrangements and actual deliveries to power stations should be examined separately.

This distinction highlights the complexity of the problem: having gas transportation infrastructure available does not necessarily mean sufficient gas is being produced, purchased and delivered to generating stations.

Meanwhile, General Manager, Engineering, at the Transmission Company of Nigeria, Mojeed Akintola, said inadequate electricity generation remained a major constraint on transmission operations.

He explained that the transmission company could only evacuate the electricity produced by generating stations, adding that efforts were ongoing to expand transmission capacity through additional transformers and power lines.

He also identified right-of-way disputes and vandalism as obstacles affecting the completion of transmission projects.

Industry stakeholders have called for a more reliable payment structure across the electricity value chain to prevent fresh debts from accumulating after government interventions.

They argue that clearing historical obligations without ensuring that current gas deliveries and electricity transactions are paid for will leave the sector trapped in a recurring cycle of indebtedness.

Increased investment in domestic gas production, particularly non-associated gas, has also been identified as necessary to improve supply reliability.

For Nigeria, where gas-fired power stations account for a substantial share of grid electricity generation, the inability to maintain payments to gas suppliers presents a significant risk to electricity availability.

Until the financial obligations between distribution companies, generation companies, gas suppliers and government agencies are addressed, consumers and businesses are likely to remain exposed to recurring supply disruptions.

The latest ₦639 billion warning therefore raises a fundamental question about Nigeria’s electricity market: how can the country achieve stable power supply when the companies responsible for generating electricity cannot consistently pay for the gas required to produce it?