Lagos, Nigeria | – Nigeria has cleared Naira 36.9 billion ($230 million) debt owed to oil companies on gas supply to the power sector, oil minister Diezani Alison-Madueke said Wednesday, as the government signed memorandum of understanding with nine oil firms to bolster gas supply to power plants.
“The legacy gas debt of Naira 36.9 billion owed to gas suppliers by the power sector has been settled by the [Nigerian] central bank-led intervention scheme,” Alison-Madueke said in a statement released by her office.
The settlement of the debts, according to the minister, was complemented with commitment from the gas suppliers including Chevron, Shell, Eni and Total, to add 2.5 Bcf/d of gas supply to the power sector.
More than 80% of this would go to the power sector to help raise Nigeria’s electricity generation to around 5 GW, she added.
The Nigerian government was in talks with eight oil companies, including ExxonMobil, Nigerian Petroleum Development Co. and domestic company Seplat Petroleum, to ink new sales purchase deals for the supply of natural gas to 10 power plants in the country, Platts reported earlier this month.
The power plants were built to tackle chronic energy supplies in the country and were to be privatized.
But the non-availability of gas had stalled plans by Nigeria to conclude the sale of the power plants previously set for the third quarter.
Gas supplies have been constrained by low gas prices set by the government, which barely cover the cost of producing and processing gas.
However, Alison-Madueke said the government has increased tariffs for gas to power to “reflect commercial rates and enable private investment in our infrastructure.”