- The Nigerian Midstream and Downstream Petroleum Regulatory Authority has ordered gas producers to stop supplying gas to power generation companies due to over N2 trillion in unpaid debts.
- Stakeholders at a workshop failed to reach an agreement on who should collect the 0.5% levy on gas supplied on behalf of the federal government.
Nigeria is facing an imminent electricity blackout due to a directive from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) instructing producers to halt gas supply to indebted power generation companies (GenCos). The NMDPRA cited substantial debts owed by these companies, which have impacted the ability of the producers to maintain operations. The Authority urged gas off-takers, especially power generation companies, to ensure prompt payment for gas supplied.
The federal government and several GenCos owe over N2 trillion in legacy debts to gas producers. Farouk Ahmed, CEO of NMDPRA, addressed this issue at a stakeholder sensitisation workshop on wholesale supply operations. Represented by Joseph Tolorunse, the agency’s legal adviser, Ahmed confirmed that the producers had been instructed to stop supplying gas to GenCos due to non-payment.
Emmanuel Cofie-Spiff of Oando highlighted that only 28% of the total gas supplied to off-takers had been paid for, placing a severe financial burden on producers. However, Ahmed rejected claims that the Authority had not supported producers in securing payment. He reiterated that the NMDPRA had directed the affected companies to suspend supply until the debts were cleared.
The workshop also revealed disagreements among stakeholders and the regulator regarding the responsibility for collecting a 0.5% levy on gas supplied on behalf of the federal government. While the NMDPRA aimed to address concerns from the earlier phase of its sensitisation program, no consensus was reached.
Ahmed also discussed the Petroleum Industry Act (PIA) of 2021, which introduced licenses for wholesale supply operations under Sections 142 and 197. The PIA prioritises domestic energy security alongside the continued focus on exports, marking a shift from the previous Petroleum Act of 1969. Ahmed emphasized the benefits of wholesale supply operations, such as encouraging investment, enhancing transparency, enforcing domestic obligations, and ensuring fair market practices.
Despite the regulatory framework, unresolved issues and disagreements persist, with the NMDPRA facing challenges in implementing effective wholesale supply operations.