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N2.7tn Debt: Government Action Stops Gas Supply Reduction

Power generation in Nigeria reached a peak of 3,624.34 megawatts on Thursday after engineers from the Transmission Company of Nigeria (TCN) successfully fixed the national power grid, which had collapsed the day before. This restoration was crucial because the national grid had failed, leaving many Nigerians without electricity on Wednesday. In fact, this was the twelfth time the grid had collapsed this year alone.

The power outage on Wednesday began around 1:36 PM, and by 2 PM, power generation had dropped to zero. However, by Thursday morning, power generation had started to recover, reaching 2,412.89 megawatts by 1 AM and climbing to 3,624.34 megawatts by 7 PM. This increase suggested that gas suppliers, who had previously threatened to stop supplying gas to power generation companies due to unpaid debts, had either delayed or canceled their plans to cut off the gas supply.

Natural gas is vital for electricity generation in Nigeria, as about 70% of the country’s electricity is produced by gas-fired power plants. On average, Nigeria generates around 4,500 megawatts of electricity, so if gas suppliers were to stop their deliveries, it would lead to a significant drop in power generation and widespread blackouts across the country.

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Officials from the Federal Ministry of Power emphasized that the government would not allow gas suppliers to cut off their supplies, which could lead to a national blackout. To prevent this, the government intervened to resolve the gas supply issues, which helped restore the grid and increase electricity generation to over 3,500 megawatts on Thursday.

A senior official from the ministry, who spoke anonymously, stated, “The government cannot allow the gas supply to be cut off.” Another source from the ministry added, “More than 70% of Nigeria’s power plants run on gas, so the government will not let gas suppliers stop their deliveries. We are actively working on this issue.”

There is speculation that the government may help settle some of the debts owed to gas suppliers, as it has done in the past, but it is not clear if this will involve direct negotiations with the gas producers. Dr. Joy Ogaji, the CEO of the Association of Power Generation Companies, confirmed that gas suppliers had indeed halted their deliveries due to outstanding debts, which have now reached over N2.7 trillion. She explained that power generation companies have been struggling to pay their gas bills, often only managing to pay a small percentage of what they owe.

Earlier this year, the Minister of Power, Adebayo Adelabu, announced that the government would begin addressing some of these debts starting in April. He mentioned plans to work with the Central Bank of Nigeria to ensure that the power sector receives priority for foreign currency, which would help increase electricity production capacity. The minister reassured power companies that the government was committed to paying off some of the outstanding debts to keep them operational.

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