The federal government has approved one hundred eighty five billion naira to settle long standing debts owed to natural gas producers for supplies delivered to power generation companies, marking one of the most significant interventions in the energy sector in recent years.

In a statement, Louis Ibah, spokesperson for the minister of state for petroleum resources (gas), said the decision followed President Bola Tinubu’s directive to clear arrears that have hindered investment and disrupted gas supply. The approval was endorsed by the National Economic Council, chaired by Vice President Kashim Shettima.

“The N185 billion legacy debts, longstanding government obligations to gas producers for past supplies, have strained cash flow and hindered operations, discouraged further exploration and production, and reduced gas supply for power generation, thereby worsening Nigeria’s power shortages and unreliable electricity supply,” Ibah said.

The payment will be executed through a royalty offset arrangement and is expected to restore confidence among domestic and international gas suppliers who have long raised concerns about chronic indebtedness in the sector.

Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, described the approval as a decisive step toward revitalising the gas sector and strengthening Nigeria’s power generation capacity in a sustainable way. He praised Tinubu’s leadership and said the move aligns with the decade of gas initiative, which targets unlocking more than twelve billion cubic feet per day of gas supply by 2030.

Ekpo said clearing the arrears will help rebuild trust between government and producers, many of whom have slowed or halted new investments due to uncertainty over payment. Improved financial stability, he added, will support upstream activities, accelerate exploration and production, and ultimately boost overall gas output.

He also noted that increased gas supply will enhance power generation and help ease persistent electricity shortages affecting households and businesses nationwide. Reliable energy, he said, is essential for industrialisation, job creation and economic competitiveness.

Ed Ubong, director of the decade of gas secretariat, said the move sends a clear signal that the administration is committed to addressing structural weaknesses across the gas value chain. “This decision underlines the Federal Government’s determination to clear legacy liabilities and give gas producers the confidence that supplies to power generation will be honoured,” he said.

Ubong added that settling the debts could unlock stalled projects, revive investor interest and accelerate Nigeria’s transition to a gas driven economy.