Nigeria’s power sector continues to struggle as rising gas flaring exacerbates an already dire electricity supply situation. The country has reportedly lost 4,100 gigawatt-hours (GWh) due to limited gas availability, further worsening the epileptic power supply experienced by households and businesses.

Gas Pricing, Security, and Supply Constraints

Gas producers have attributed the shortfall to several factors, including pricing issues, security concerns, and logistical constraints. The Electricity Generating Companies (GenCos), which rely on gas for power generation, have lamented limited gas supply and mounting debts as major setbacks.

The Executive Secretary of the Association of Power Generation Companies, Dr. Joy Ogaji, disclosed that only 27% of invoices for 2024 had been settled, leaving a significant shortfall of 63%. This is in addition to the N2.5 trillion owed to GenCos from 2015 to December 2023.

“Payment is our major challenge. If payments are not made, gas suppliers will not be able to continue operations. Gas is not a free product,” Ogaji stated.

NBET’s Silence on Payment Delays

The Nigerian Bulk Electricity Trading (NBET) Plc, which is responsible for settling invoices for power supplied by GenCos, has remained silent on the issue. When contacted, the Acting Chief Executive Officer, Johnson Akinnawo, declined to comment on the payment delays, a situation that has further stalled operations in the electricity value chain.

Sabotage and Vandalism Worsen Gas Supply Issues

The Centre for Promotion of Private Enterprise (CPPE) has identified sabotage and vandalism of gas pipelines in the Niger Delta as a major impediment to gas supply. Dr. Muda Yusuf, CEO of CPPE, stated that pipeline vandalism has significantly disrupted gas flow, contributing to Nigeria’s power supply challenges.

“Unlike illegal refining and oil theft, gas pipeline vandalism is a direct act of economic sabotage. However, the bigger issue is the liquidity crisis affecting GenCos, preventing them from meeting their financial obligations to gas suppliers,” Yusuf said.

Reports indicate that the outstanding invoices owed by NBET stood at N2.7 trillion as of 2024. Without liquidity, GenCos are unable to procure gas, leading to frequent power plant shutdowns and losses amounting to billions of Naira.

High Energy Costs for Businesses and Households

The power crisis has forced businesses and households to seek alternative energy sources, often at exorbitant costs. With petrol prices exceeding N900 per litre and diesel surpassing N1,000 per litre, independent power generation has become a costly burden for many.

Mazi Colman Obasi, National President of the Oil and Gas Services Providers Association of Nigeria (OGSPAN), acknowledged some improvements due to consumer classification into different bands but emphasized that inadequate and unstable power supply remains a critical issue.

The Way Forward

Experts believe that resolving the liquidity crisis in the power sector is key to addressing these challenges. A sustainable framework for electricity financing, improved tariff structures, and enhanced security measures for gas infrastructure are essential for stabilizing Nigeria’s power supply. Until then, businesses and households will continue to bear the brunt of an unreliable power sector, stifling economic growth and productivity.

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