Federal Government Initiates $120 Million Payment to Gas Suppliers to Boost Production.
The Federal Government has taken significant steps towards stimulating gas production in Nigeria by making a payment exceeding $120 million to gas suppliers. This payment is part of the $1.3 billion owed to gas suppliers, aimed at reducing outstanding debts and encouraging increased gas production.
During the 7th Edition of the Nigeria International Energy Summit (NIES 2024), Mr. Ed. Ubong, Director of the Decade of Gas Secretariat, highlighted the government’s commitment to addressing the debt issue. Speaking at a session themed “From Blueprint to Reality: Navigating Nigeria’s Gas Decade and Balanced Narrative on Energy Transitions,” Ubong emphasized the importance of clearing the remaining debt balance.
As of 2023, gas producers were owed approximately $1.3 billion in arrears. However, between October and January 2024, the government has made payments exceeding $120 million. Ubong also discussed ongoing efforts to develop a strategy for clearing the remaining debt balance, emphasizing the potential increase in gas availability once the OB3 gas pipeline is completed.
Furthermore, Ubong underscored the need to build gas capacity and engage young professionals in the sector’s development. He encouraged interns and young individuals to contribute their time and energy to support the industry’s growth and long-term goals.
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In addition to addressing debt issues, Akachukwu Nwokedi, President of the Nigerian Gas Association (NGA), raised concerns about the impact of multiple taxes, levies, and policy regulations on business costs. Nwokedi advocated for the harmonization and simplification of taxes to promote business growth and attract foreign investment, drawing examples from countries like Australia known for their investor-friendly policies.
Meanwhile, the Transmission Company of Nigeria (TCN) attributed the country’s low levels of power generation and distribution in January 2024 to constraints related to gas supply. Ndidi Mbah, TCN’s General Manager of Public Affairs, highlighted the adverse effects of inadequate gas supply on thermal power generating companies and the transmission grid’s ability to distribute electricity across the nation. TCN reassured stakeholders of its efforts to maintain grid integrity despite challenges in power generation and distribution.
In summary, the Federal Government’s payment to gas suppliers represents a significant step towards enhancing gas production in Nigeria. Efforts to address debt issues, streamline taxes, and improve gas supply infrastructure are crucial for promoting business growth, attracting investment, and ensuring reliable power generation and distribution nationwide.
