Mr Viral
The Federal Government has announced plans to offset the ₦2.7 trillion debt owed to gas companies by utilising royalty credits.
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, disclosed this on Thursday during a virtual meeting organised by the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, to mark his second year in office.
Komolafe, represented by Dennis Anyanwu, explained that since most gas producers pay royalties to the government, discussions are ongoing to allow the debts owed for gas supplied to power plants to be extinguished through royalty offsets.
“One of the solutions canvassed is the extinguishment of the legacy debt through royalty credits. You might note that most of the companies that are owed are gas producers; they pay royalties on gas. So, some of the discussions have been, can such debts be extinguished on the basis of royalty credits that they have?” he said.
He added that the commission is guiding the government on implementing the mechanism without disrupting industry operations or government revenue flow.
Reacting to the proposal, Chairman of Renaissance Africa Energy, Layi Fatona, described the plan as “bold and very clear in its intention.”
In June, the Independent Petroleum Producers Group, led by its chairman, Abdulrazaq Isa, had appealed to the government to resolve the mounting legacy debt, warning of its impact on gas supply to the power sector. As of December 2024, the Federal Government and power generation companies owed gas producers over ₦2.7 trillion.
Earlier in 2024, several gas firms halted supplies to electricity generation companies due to unpaid bills, triggering weeks of nationwide power shortages.
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