KEY POINTS
- The Federal Government is implementing measures to address gas shortages affecting thermal power plants and stabilise Nigeria’s fluctuating electricity supply.
- Generation companies face a mounting N6.8 trillion debt, with liquidity constraints discouraging gas suppliers and limiting power output.
- Government is considering a N4 trillion bond programme to settle sector debts as actual generation remains far below Nigeria’s 13,000MW installed capacity.
The Federal Government has announced plans to address persistent gas shortages affecting electricity generation, as unstable power supply continues across Nigeria. Minister of Power, Adebayo Adelabu, disclosed that targeted interventions are already being implemented to stabilise gas supply to thermal power plants, which produce the bulk of the country’s electricity.
For years, erratic power supply has been largely attributed to insufficient gas supply to generation companies, limiting their ability to operate at optimal capacity and contributing to frequent drops in electricity output nationwide.
Industry data indicates that as much as 68 percent of power plants have been unable to run efficiently due to gas shortages and payment disputes within the power value chain, worsening grid instability.
Reforms Focus on Coordination Between Gas and Power Sectors
Adelabu explained that the government’s reform agenda prioritises improved coordination between the gas and power sectors. According to him, stronger alignment between both industries is critical to unlocking idle generation capacity and stabilising the national grid.
He added that the ongoing reforms, driven by the administration of President Bola Tinubu, are expected to gradually improve electricity supply for households, businesses, and industries.
The minister urged Nigerians to remain patient, noting that the measures being implemented would deliver more reliable and sustainable electricity in the long term.
The power sector’s challenges are further complicated by a mounting debt crisis affecting generation companies. GenCos are currently weighed down by an estimated N6.8 trillion debt, which has forced several operators to shut down operations.
The debt, which has accumulated since 2015 and continues to rise by about N200 billion monthly, has severely constrained operators’ ability to maintain infrastructure, procure gas, and meet operational expenses.
Industry figures also show that about 60 percent of payments owed to GenCos remain unpaid by gas suppliers and transporters, worsening liquidity across the energy value chain and discouraging continued gas deliveries.
Gas-fired plants account for nearly 70 percent of Nigeria’s electricity generation, making the sector highly dependent on consistent gas supply. However, suppliers have increasingly become reluctant to continue deliveries without payment guarantees, intensifying disruptions nationwide.
The persistent liquidity challenges have therefore compounded the gas shortage, creating a cycle of reduced generation, poor supply, and financial strain across the sector.
