FG plans naira payment for local gas operators

Bisola David
Bisola David
FG plans naira payment for local gas operators

By Melvin Onwubuke

The Federal Government has said it is putting measures in place to stop gas producers from collecting dollars in payment for local gas supplies to local operators.

The Minister of Power, Adebola Adelabu, who made this known in post on his X handle, said it was crucial to find innovative solutions to the perennial gas shortage problem in the country.

The minister spoke against the backdrop of the consistent power outage in the country which power generation companies have consistently linked to gas shortage.
Stressing the need to tackle the gas shortage problem, the minister said he had already established a join ministerial committee to tackle the problem.

According to Adelabu, there will be need to allow power generating companies and other users to buy gas from the operators and pay in naira, instead of dollars.
Natural gas is traditionally priced and paid in dollars, but the continuous naira depreciation has made it difficult for local gas operators to make payment.
Naira weakness is also expected to result in sharp increase in price in the domestic market. Adelabu added that he had met with the Minister of State for Petroleum Resources (Gas), Ekprerikpe Ekpo, with a view to finding solution to the crisis.

Adelabu wrote on his X handle, “Yesterday, I met with Hon. Ekprerikpe Ekpo, Minister of State for Petroleum Resources (Gas), to address the ongoing challenge of insufficient gas supply to power generation companies (GENCOs). Nigeria has significant gas reserves, but delivering enough gas to meet domestic demand has been a persistent issue. To tackle this, we’ve established a joint ministerial committee.”

He added, ‘”It’s crucial to find innovative solutions for ensuring stable gas supply to the power sector. Proposing domestic gas payment in naira is a key step toward stability, aligning with our economy’s needs and promoting sustainable energy production. Payment shortfalls within the electricity sector pose risks to production and the entire value chain. Leveraging my financial sector experience and contacts, I’m working with stakeholders to advocate for legislative measures mandating naira-denominated payments for domestic gas supply.”

According to the power minister, addressing the vandalisation of gas pipelines in the Niger Delta is also a priority.
He said a 2021 NEITI report highlighted 7,143 cases of pipeline breakages and deliberate vandalism between 2017 – 2021, significantly impacting the efficiency of the electricity supply industry (NESI).

He explained, “Clear contractual arrangements between GENCOs and gas suppliers are essential to ensure consistent supply and maximize our power generation capabilities. The upcoming commissioning of the OB3 line is expected to greatly enhance gas supply to the northern region, fostering industrial growth.
“In conclusion, the establishment of a joint ministerial committee to tackle the issue of inadequate gas supply to power generation companies represents a crucial stride towards resolving challenges in Nigeria’s energy sector. We are dedicated to assembling a team of experts for this committee, and upon its formation, we will publicly announce the timelines.”

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