FG offsets $120m debt owed gas firms

From Okwe Obi, Abuja

The Federal Government said it has paid over $120 million to offset part of the debts owed to the gas companies (GasCos) for electricity generation.
The government said the measure was to address the indebtedness of the country’s power sector to electricity-generating companies (GenCos) and the gas companies (GasCos).
The Director of Decade of Gas Secretariat, Ed. Ubong, disclosed this at the ongoing 7th Edition of the Nigeria International Energy Summit (NIES 2024) yesterday in Abuja.
Ubong, also, said the government is working on a framework to curb most of the failures in the system.
He said, “the arrears gas producers are owed as at last year was about $ 1.3 billion. But I am pleased that between October 2023 and the end of January, the government has paid over $120 million to offset some of that money.”
Earlier, the Minister of Power, Adebayo Adelabu, had noted that the total debt owed to power generating companies was N1.3 trillion, out of which 60 per cent was owed to gas suppliers.
Also, the Transmission Company had attributed the recent decline in power supply to decrease in available generation into the grid due to gas constraints.
However, Ubong noted that the government was working on a framework that can mitigate most of that failure.
“That is a piece of work that is ongoing and we hope that it will be approved and then the industry can move away from that legacy issue.
“We must build a capacity for gas. The engineers, the technicians that will work in this new gas sector that we are looking at for the next eight months.
“And at the Secretariat, we are committed to that. We are looking for interns, we are looking for young people who are willing to join us and then provide their time and energy to support the wider and bigger goals of the sector.
“For the first time, we now have a ministerial committee that involves the minister of State for Gas and the Ministry of Power. Because power and gas go together.
“We are confident that when that becomes fully operational, that critical link between gas and power will lead to more sustainable solutions going forward,” he said.
President, Nigerian Gas Association, Akachukwu Nwokedi, said that the legacy debt owed to players in the electricity value chain was among the factors eroding investors’ confidence and investments.
He stressed on the need for the formulation of policies to boost sector growth and attract investments.
Nwokedi urged that regulation should be positioned primarily as enablers to business, especially recognising the new reality in the country.
“We, therefore, recognise that there have been steps to clear the debts and I’m happy to hear that over $120 million have already been cleared, but for us, it is not just about clearing the debts, which is a very good thing, but it was putting in place right policies and mechanisms that will prevent reoccurrence.
“Then we have to call it the elephant in the room which is the multiplicity of taxes or levies in existing policy regulations, increasing the cost of doing business which chips away all the returns and discourages new and existing players.
“I must say it seems every law passed in Nigeria today levies the business community. And the simple message here is that this has to stop and the approach needs to be harmonised and streamlined as a matter of urgency,” he said.