Nigeria’s electricity supply could face further disruptions as mounting debts owed to gas suppliers, inadequate investment in gas production and weak transmission infrastructure continue to undermine power generation.
Industry stakeholders have warned that the absence of a sustainable payment framework for gas supplied to electricity generation companies is threatening the stability of the power sector, alongside poor commercial arrangements and insufficient investment in critical infrastructure.
The warning was issued at the sixth annual conference of the Power Correspondents Association of Nigeria in Abuja, where participants examined the structural and financial challenges confronting the electricity industry and their implications for Nigeria’s ambition of building a $1tn economy by 2030.
The concerns come against the backdrop of renewed disruptions to electricity supply across the country.
On November 5, the Nigerian Independent System Operator attributed a drop in national grid generation to insufficient gas supply to thermal power plants and reduced water inflows into hydroelectric reservoirs. The development resulted in fewer hours of electricity supply and increased load shedding.
However, the Nigerian National Petroleum Company Limited subsequently maintained that its gas transportation network remained available, arguing that gas production, commercial supply arrangements and actual deliveries to power plants were separate issues requiring independent assessment.
Speaking at the conference, the General Manager, Gas Commercial, Nigerian National Petroleum Development Company, Bashiru Adoke, described the gas-to-power challenge as solvable but said substantial investment and a dependable payment mechanism were necessary to address the problem.
Adoke identified the inability of electricity market operators to meet their financial obligations to gas suppliers as a major threat to sustainable power generation.
He explained that generating companies were not receiving sufficient payments for electricity supplied to the market, leaving them unable to settle gas invoices and maintain regular supplies.
According to him, gas accounts for between 60 and 75 per cent of the production costs of electricity, while payments received for generated energy cover only about 40 per cent of the invoices.
He disclosed that outstanding payments owed to gas suppliers by the electricity market had exceeded N630bn, warning that the situation could worsen without a comprehensive payment arrangement.
“There is no robust mechanism for payment of gas supply, because the proceeds from the market is not even enough to pay for gas supply. If you see the invoice monthly for energy generated, it is about 40 per cent and the gas takes about 60-75 per cent of production cost.
“The money is not even enough. That’s why you see in today, the market owes us over N630bn for power generated and consumed by Nigerians. We should try to establish a robust mechanism for payment of gas or else we would continue to have problems. The government intervention every three or four months won’t solve the issues,” he said.
Adoke cautioned that periodic government interventions to clear outstanding liabilities would achieve little if fresh debts continued to accumulate in the electricity market.
He noted that the government's intervention in legacy debts covered obligations incurred between 2015 and 2025, but warned that liabilities arising from 2025 onwards were already building up without a corresponding resolution.
“The intervention by the government, which is on the legacy debt, is from 2015 to 2025. What about the debt from 2025? It is already accumulating and it is not being addressed. It is a problem,” he added.
The gas commercial executive also called for greater investment in non-associated gas production, stressing that depending largely on associated gas, which is produced alongside crude oil, could expose electricity generation to fluctuations in crude oil production.
He said the Federal Government had introduced incentives through executive orders to attract investments into the gas sector but maintained that additional capital was required to expand production and ensure consistent supply to power plants.
Adoke further expressed concern that high electricity tariffs could encourage consumers to abandon the national grid in favour of solar energy and other alternative sources of electricity.
He warned that a growing shift towards independent power solutions could undermine the long-term viability of the national grid if the electricity market failed to become more reliable and affordable.
“I am scared for this national grid because by the time everybody abandons it and uses solar, I don’t know what the grid will be doing,” he said.
Also speaking, the General Manager, Engineering, Transmission Company of Nigeria, Mojeed Akintola, identified inadequate power generation as a major limitation to the country's transmission capacity.
Akintola explained that the transmission company could only evacuate and distribute the volume of electricity generated by power stations, stressing that improvements in transmission infrastructure alone would not resolve the country's electricity challenges without corresponding growth in generation.
He said TCN was expanding its transmission capacity through the installation of additional transformers and construction of new transmission lines.
However, he identified disputes over rights of way and vandalism of electricity infrastructure as major setbacks affecting the execution and completion of transmission projects.
The stakeholders stressed that addressing the electricity crisis would require coordinated efforts to resolve payment challenges across the power value chain, attract investment into gas production and strengthen transmission infrastructure.
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