$1.3bn debt: We’ve paid $120m to gas companies, says FG

The federal government says it has paid over $120 million to offset some of the debts owed to the gas companies (GasCos).

Ed Ubong, director of the decade of gas secretariat, disclosed this on Thursday while speaking at the 2024 edition of the Nigeria International Energy Summit (NIES) in Abuja.

He said the government is also working on a framework to help in the liquidation of the debt.

“The arrears gas producers are owed as of last year 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 debt,” he said.

“More importantly, the government is also now working a framework that can liquidate most of that arrears.

“That’s the piece of work that is ongoing and we hope that it will be approved and the industry can move away from that legacy issues.”

Ubong urged stakeholders in the oil and gas industry to collaborate with the government in repositioning the sector for enhanced economic prosperity.

He also stressed the importance of capacity building in the gas sector, encouraging young professionals to contribute their expertise to the industry’s growth.

“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,” he said.

“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.”

‘FG SHOULD PUT POLICIES IN PLACE TO PREVENT RECURRENCE’

Also speaking at the summit, Akachukwu Nwokedi, president of the Nigerian Gas Association, said the legacy debt owed to players in the electricity value chain is among the factors gradually destroying investors’ confidence and investments.

He asked the federal government to go beyond paying the debts to implement policies that would prevent a recurrence.

“We therefore recognise that there have been steps to clear the debts and I am happy to hear that over $120 million have already been cleared,” Nwokedi said.

“But for us, it is not just about clearing the debts, which is a very good thing, but it is putting in place the 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.”

On January 26, 2024, Adebayo Adelabu, the minister of power, had said the federal government was working to ensure that debts owed to power generation companies are paid to resolve the declining electricity supply.

He later disclosed on February 15, that the federal government owed N1.3 trillion to generating companies (GenCos) and $1.3 billion to gas firms.

Adelabu said the power cuts experienced in the country were due to the low supply of gas to power-generating companies.

He said the payments would improve gas supply and bolster power generation.