Nigeria’s electricity crisis could worsen 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.
They said the absence of a sustainable payment mechanism for gas suppliers was threatening the stability of electricity generation, while poor commercial arrangements and infrastructure deficiencies continued to frustrate efforts to improve power supply.
The concerns were raised at the sixth annual conference of the Power Correspondents Association of Nigeria in Abuja, where stakeholders examined the financial and structural challenges confronting the electricity sector and their implications for Nigeria’s ambition of building a $1tn economy by 2030.
The warning comes amid renewed disruptions to electricity supply across the country. On November 5, the Nigerian Independent System Operator attributed declining national grid generation to inadequate gas supply to thermal power stations and reduced water inflows into hydroelectric reservoirs, resulting in shorter supply hours and increased load shedding.
However, the Nigerian National Petroleum Company Limited subsequently maintained that its gas transportation network remained available, insisting that gas production, commercial supply arrangements and actual deliveries to power stations should be examined separately.
Speaking at the conference, the General Manager, Gas Commercial, Nigerian National Petroleum Development Company, Bashiru Adoke, described the gas-to-power crisis as surmountable but warned that resolving it would require sustained investment and a reliable payment structure.
He identified the inability of electricity market operators to adequately pay for gas supplied to generating companies as one of the biggest obstacles to stable power generation.
According to him, generating companies receive insufficient payments for the electricity they produce, leaving them unable to settle gas invoices and sustain supply.
Adoke disclosed that outstanding payments in the electricity market had exceeded N630bn, warning that the situation was becoming increasingly unsustainable for gas suppliers.
He explained that gas accounts for between 60 and 75 per cent of electricity production costs, while payments received by generating companies cover only about 40 per cent of the energy supplied.
“There is no robust mechanism for payment of gas supply, because the proceeds from the market are 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 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.
He warned that periodic government interventions to settle outstanding liabilities would achieve little if fresh debts continued to accumulate across the electricity value chain.
According to him, the Federal Government’s intervention programme covers legacy debts accumulated between 2015 and 2025, leaving subsequent obligations largely unresolved.
“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.
Adoke also called for increased investment in non-associated gas production, arguing that excessive dependence on associated gas, which is produced alongside crude oil, could expose electricity generation to disruptions in crude oil production.
He noted that though the Federal Government had introduced incentives through executive orders to attract investment into gas projects additional capital was needed to expand production and guarantee reliable supplies to power stations.
The NDPHC official also cautioned that persistently high electricity tariffs could encourage more consumers to abandon the national grid for solar energy and other independent power solutions.
He expressed concern that widespread migration to alternative energy sources could undermine the long-term sustainability of the national grid.
“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.
Meanwhile, the General Manager, Engineering, Transmission Company of Nigeria, Mojeed Akintola, identified inadequate electricity generation as a major constraint to effective power transmission.
He explained that the transmission company could only evacuate 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 increases in generation.
Akintola said TCN was expanding its transmission capacity through the installation of additional transformers and construction of new transmission lines.
However, he identified right-of-way disputes and vandalism as major obstacles delaying infrastructure projects.
He stressed the need for coordinated investment across gas production, electricity generation and transmission, warning that isolated interventions would not deliver sustainable improvements in electricity supply.
The latest warning highlights the deepening financial crisis in Nigeria’s electricity market, where inadequate payments, mounting debts and infrastructure deficiencies continue to undermine the reliability of power supply despite years of reforms and government interventions.
