Features
FG Intervention Prevents Gas Supply Cut Amid N2.7tn Debt
Power generation in Nigeria reached a high of 3,624.34 megawatts on Thursday after engineers from the Transmission Company of Nigeria (TCN) restored the national grid, which had collapsed the previous day.
The Federal Government also intervened to address gas supply issues affecting generation companies (Gencos) after suppliers halted gas deliveries due to outstanding debts of approximately N2.7 trillion. Wholesale gas suppliers had stopped supplying natural gas to power generation companies because of the unpaid debts from previous deliveries.
On Wednesday, Nigeria experienced a nationwide blackout after the grid collapsed for the 12th time this year. The collapse occurred at 1:36 pm, and by 2 pm, power generation had dropped to zero. However, by Thursday, TCN data showed that the grid was restored, with generation reaching 2,412.89 MW by 1 am and peaking at 3,624.34 MW by 7 pm, suggesting that the gas suppliers had either delayed or lifted their suspension on gas deliveries.
Nigeria typically generates an average of 4,500 MW of electricity, with about 70% of this production coming from gas-fired power plants. A halt in gas supply would lead to a dramatic decline in power generation and cause widespread blackouts across the country.
Senior officials at the Federal Ministry of Power (FMP) stated that the government could not allow gas suppliers to cut off power generation. They emphasized that the government intervened by addressing the gas supply issues, ensuring that power generation exceeded 3,500 MW on Thursday.
A senior official from the FMP, speaking on condition of anonymity, remarked, “The government cannot allow the gas supply to be cut off.” Another source added, “Over 70% of Nigeria’s power plants are gas-fired, so how could the government allow suppliers to stop delivering gas? The government is actively addressing this issue.”
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It is believed that the government will resolve the gas debt issue, possibly by settling some of the outstanding payments, though not necessarily by negotiating directly with the gas suppliers.
Dr. Joy Ogaji, CEO of the Association of Power Generation Companies, confirmed on Wednesday that gas suppliers had stopped supplying Gencos. “They have informed our Gencos that they will not resume supply until the outstanding debts are settled. The total debt has now surpassed N2.7 trillion, and gas accounts for 70% of the thermal Gencos’ invoices,” she explained.
Earlier this year, Minister of Power Adebayo Adelabu announced that the government would begin addressing some of the debts owed to power generating companies and gas suppliers starting in April. During a visit to Egbin Power Plc in Lagos, he stated that the government would work with the Central Bank of Nigeria to prioritize foreign exchange allocation for the power sector, a move that would help increase generation capacity.
“The Federal Government is now prioritizing reducing outstanding debts, and I have assured the board that we will begin making payments from April to ensure continued operations,” Adelabu said.