Blackout Looms as Gas Firms Cut Supply Over N3.3tn Debt

Nigeria’s electricity crisis may worsen in the coming weeks as gas suppliers halt supply to thermal power plants over an estimated N3.3tn debt owed by power generation companies, a development that could deepen the nationwide power shortage.

The Chief Executive Officer of the Association of Power Generation Companies, Dr Joy Ogaji, disclosed this during an interview on Fresh FM, monitored by our correspondent, warning that the mounting debt across the power value chain is pushing the sector toward a major crisis.

Her comments come amid worsening electricity supply across the country, with many Nigerians experiencing prolonged blackouts since the beginning of the year.

Data from the Nigerian Independent System Operator shows that power generation dropped below 4,000 megawatts in recent weeks, largely due to gas constraints affecting thermal power plants. As of Tuesday, the 11 power distribution companies were sharing only 3,053MW, making the reliable supply of electricity impossible across their franchise areas.

Electricity consumers, regardless of the supply bands they belong to, have continued to lament the situation, especially amid rising fuel prices and the severe heat.

Recently, NISO provided operational data illustrating the scale of the shortfall, noting that thermal power plants require an estimated 1,629.75 million standard cubic feet of gas per day to operate at optimal capacity. However, as of February 23, 2026, actual supply stood at about 692.00 mmscf per day—representing less than 43 per cent of the required volume.

As gas supply continues to decline, it was gathered that several power plants have shut down while the Transmission Company of Nigeria engages in load shedding, rationing the limited energy available among the DisCos. On their various platforms, the distribution companies have repeatedly appealed to customers, attributing the outages to gas shortages.

Speaking on the situation, Ogaji explained that the crisis stems from the failure of the Nigerian Bulk Electricity Trading Plc to fully pay for electricity generated by GenCos since the sector’s privatisation. According to her, the government currently owes generation companies about N6.8tn, with roughly 70 per cent of the amount relating to thermal plants.

She explained that about 70 per cent of whatever the government owes gas-fired power plants belongs to gas suppliers, meaning gas companies are owed about N3.3tn out of the N4.76tn tied to thermal generation.

Ogaji disclosed that gas suppliers have informed generation companies that they will no longer supply gas to power plants unless payments are made. She added that power generation companies have continued to keep records of all outstanding payments owed to them by the Nigerian Bulk Electricity Trading Plc.

“NBET is set up to buy power from GenCos and sell to DisCos. The aim is that as they buy power, they will pay in full, but since 2013 till today, they’ve never paid in full, so this debt is now N6.8tn,” she said.

Providing a breakdown of the debt, Ogaji stated that the liabilities have grown significantly over time.

“From 2015 to December 2024, the debt profile grew to N4tn. In each month of 2025, there is a shortfall of N200bn, so if you calculate N200bn times 12, that is N2.4tn, making the whole debt N6.4tn after December 2025. We’re already in March 2026. The debt grew to N6.6tn in January and N6.8tn in February. At the end of March, you need to add N200bn again to make it N7tn,” she said.

Ogaji added that a significant portion of the outstanding debt is owed to gas suppliers because thermal plants account for the majority of electricity generation on the national grid.

She said, “The generation companies have hydros, and we have thermal power plants. The thermal power plants are the ones that use gas. The hydro plants use water, so they do not owe gas suppliers.

“On the grid, we have 30 power plants; out of that, about 30 per cent are hydro now because Zungeru has added 700 MW, and there are other smaller hydro plants.

So, the remaining 70 per cent comes from gas.

“Therefore, for every N100 the thermal plants invoice NBET, N70 belongs to the gas suppliers. So, if we go by that ratio, out of the N6.8tn that I’m quoting, if we take out 70 per cent of that money that belongs to thermal plants, we need to work out another 70 per cent of that thermal 70 per cent, and that belongs to gas suppliers.”

Industry estimates based on this calculation show that about N3.3tn of the total debt is owed to gas producers, whose fuel powers most of Nigeria’s electricity generation.

The GenCo chief warned that the worsening debt crisis is directly responsible for the current electricity shortages. “Yes, it is 120 per cent correct to say that the debt is the reason why we are in darkness,” she said.

Ogaji added that gas producers are increasingly insisting on payment before supplying fuel to power plants.

“Gas is not available because the gas suppliers have told us that if we need gas, we need to put money on the ground to get gas in the pipe. We owed them a lot of money.

“The gas suppliers have really been very kind to us. They are the reason why the thermal plants are still generating power. But now, they have told us that if there’s no payment, there will be no gas for the thermal power plants,” she said.

According to Ogaji, the inability of generation companies to receive payments has also left them struggling to service bank loans obtained during the 2013 power sector privatisation.

“We owe gas suppliers, and we also owe lenders. You may have read in the papers that First Bank has been threatening to take over Egbin because of the acquisition loan,” she said.

She explained that GenCos’ financial burden has worsened significantly due to the sharp depreciation of the naira since the loans were obtained.

“In 2013, during the privatisation, the GenCos took loans from different banks so that they could make a lot of power available to Nigeria, but with this lack of payment, they are not able to pay their loans, and another problem is they took those loans in dollars in 2013 when the dollar to the naira was N155 to one dollar.

“Today, the exchange rate is N1,400 to the dollar. So you can see that even if the government decides to pay the GenCos the N6.8tn today, it is not enough for them to pay the gas suppliers, the banks, and for operational maintenance,” she added.

With thermal plants accounting for roughly 70 per cent of electricity generation on the national grid, stakeholders warn that any prolonged disruption in gas supply could significantly reduce generation capacity and worsen the electricity crisis affecting households and businesses across the country.

Meanwhile, several power generation companies have appealed to electricity consumers for patience, stating that the worsening gas constraints are beyond their control.

The situation has left many homes and businesses struggling with prolonged outages, raising fears that the electricity supply may deteriorate further if the financial impasse in the power sector is not urgently resolved.

Meanwhile, the Minister of Power, Adebayo Adelabu, told our correspondent that the Federal Government is addressing the situation. Adelabu, speaking through his media aide, Bolaji Tunji, said the matter is being handled in collaboration with the Minister of State for Petroleum (Gas), Ekperikpe Ekpo.

“It is being handled jointly with the Minister of State for Petroleum (Gas),” Bolaji replied in a brief message.

The spokesman for the gas minister, Louis Ibah, declined to comment when contacted by our correspondent.

Despite the outstanding legacy debts, gas companies supplied 179.79 billion standard cubic feet of gas to power firms between January and July 2025. This was valued at about N607bn during the period.

As of December 2024, it had been reported that the Federal Government and some power generation companies owed over N2.7tn in legacy debts to gas producers in Nigeria.

Gas companies had earlier, in the first quarter of 2024, halted gas supply to power generation companies due to mounting debts, plunging the country into weeks of darkness. The Federal Government intervened with promises that gas producers said were not fulfilled.

As gas producers continued to complain about unpaid debts, the Federal Government last year said it planned to clear the N2.7tn owed to gas companies through royalty payments.

The former Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, disclosed this during a Zoom meeting organised by the Minister of State for Petroleum Resources (Gas), Ekpo. However, there have been no updates on the proposal.

As of today, thermal plants consume the largest share of the domestic gas supply in Nigeria, even though many generation companies still owe billions of naira to gas producers.

According to reports, one of the largest power plants in the country owes an international oil company over N500bn in unpaid gas debt. However, generation companies insist they can only settle gas debts after the Federal Government clears the N6.8tn owed to them.

Speaking at a function in Lagos, the Chairman of Geometric Power and former Minister of Power, Barth Nnaji, lamented that despite Nigeria’s proven gas reserves of over 200 trillion cubic feet, the country still struggles to supply enough gas to its power plants.

Nnaji expressed deep concern over what he described as a national contradiction—being rich in natural gas yet unable to meet domestic electricity generation needs. “It’s quite perplexing. We are a gas-rich country, yet we struggle to supply enough gas to our power plants. It’s a contradiction that many find hard to understand,” he said.

Nnaji noted that while the official domestic gas price for power generation was previously pegged at $2.42/MMBtu, the Nigerian Midstream and Downstream Petroleum Regulatory Authority revised it downward to $2.13/MMBtu effective April 1, 2025.

However, he explained that generation companies often source gas from the open market at $2.70 or higher, depending on supply constraints and contractual terms.

“Because most electricity is generated using gas, and GenCos depend heavily on sourcing this gas from the open market, the disparity between the regulated and actual prices continues to strain the sector,” Nnaji said.

He warned that the pricing gap is worsening liquidity challenges in the electricity sector, contributing significantly to the over N1tn electricity subsidy recorded in the first half of 2025 and the growing trillion-naira debt owed to GenCos by the Federal Government.

According to him, the gas-to-power benchmark remaining below market realities places an unsustainable burden on power producers.

In December 2025, Ekpo announced that President Bola Tinubu had authorised the settlement of N185bn in long-standing debts owed to natural gas producers to stabilise power generation.

He said the N185bn legacy debts—longstanding government obligations to gas producers for past supplies—had strained cash flow and hindered operations; discouraged further exploration and production; and reduced gas supply for power generation, worsening Nigeria’s electricity shortages.

“The payment, to be executed through a royalty-offset arrangement, is expected to restore confidence among domestic and international gas suppliers who have long expressed concern about persistent indebtedness in the sector,” the gas minister said in a statement a few months ago.