Of the $1.3 billion in debt owed to gas companies, the federal government has already paid $120 million for the supply of gas needed to operate gas-fired power plants around the nation.
Due to the Gencos’ debt to gas-producing companies, certain gas providers have curtailed their supply, while others have stopped providing the commodity to power-generating companies, resulting in Nigeria currently experiencing a low power supply.
Chief Adebayo Adelabu, the minister of power, recently disclosed that the reason for the decline in power generation and consequent low supply since January was that gas providers ceased providing gas for electricity generation because the industry was owing to gas producers.
More than 70% of Nigeria’s electricity comes from gas-fired thermal power facilities.
Hydroelectric power stations provide the remaining electricity.The Director of the Decade of Gas Secretariat, Ed Ubong, spoke at the ongoing 7th Nigeria International Energy Summit in Abuja on Thursday.
He expressed his joy that the Federal Government has paid down $120 million of the $1.3 billion in gas obligations.The Federal Ministry of Petroleum Resources oversees the Decade of Gas Secretariat (Gas).
Since Nigerian power consumers are now not paying the exact value for electricity, the Federal Government is subsidizing electricity by covering the cost of the gas used to generate power.
“As of last year, that (gas debts) was about $1.3bn, depending on how you add up the numbers. But I am pleased that between October and the end of January, the government has paid over $120m to offset some of that money,” Ubong disclosed.
Weeks ago, according to NewsVEO, the Minister of Power revealed that the total amount of debt owed by Nigeria’s power sector to gas and electricity producing businesses had increased to almost N3.3 trillion.
The investigation also revealed that the government had declared that it was now extremely difficult to sustain power subsidies, and that energy subsidies for 2024 would cost almost N3 trillion, whereas only N450 billion was allocated for this reason in this year’s budget.
Nigeria needs to start moving toward a pricing model that is cost-effective, according to the power minister, who also said that the debt to gas firms was $1.3 billion and the debt to electricity generating companies was N1.3 trillion.
At the summit on Thursday, Ubong informed the delegates that the government was creating a framework to deal with the mistakes that frequently result in such massive gas debts in the electricity industry.