Emmanuel OchayiIn a bid to address the persistent challenges plaguing Nigeria’s power sector, Minister of Power, Adebayo Adelabu, has unveiled a proposal to mandate domestic gas payments in naira.
This initiative aims to combat the recurrent shortage of gas supply, a major hindrance to electricity generation in the country.
Speaking after a crucial meeting with the Minister of State for Petroleum Resources (Gas), Ekperikpo Ekpe, Minister Adelabu emphasized the necessity of aligning gas payments with the local currency. “Proposing domestic gas payment in naira is a key step toward stability, aligning with our economy’s needs and promoting sustainable energy production,” he remarked.
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Highlighting the urgency of the situation, he added, “Payment shortfalls within the electricity sector pose risks to production and the entire value chain.” Leveraging his financial expertise, the Minister pledged to collaborate with stakeholders to advocate for legislative measures enforcing naira-denominated payments for domestic gas supply.
Moreover, Minister Adelabu addressed the pressing issue of gas infrastructure vandalization, citing a 2021 NEITI report that documented over 7,000 incidents of pipeline breakages. To mitigate such disruptions, he announced plans for robust contractual agreements between electricity generation companies (GENCOs) and gas suppliers to ensure consistent gas supply.
The backdrop to this development includes recent revelations of inadequate gas supply crippling major power stations, such as Omotosho and Olorunsogo, which were operating at less than 25% of their capacity. This shortfall culminated in a nationwide blackout when the national electricity grid shut down due to gas supply shortages.
While natural gas is traditionally priced in dollars, the Minister’s proposal aims to address challenges posed by currency fluctuations and financial constraints, which have impeded the exploitation of Nigeria’s vast gas reserves. By transitioning to naira payments and implementing caps on dollar prices, the government seeks to foster a more stable and sustainable energy ecosystem.
Minister Adelabu’s visionary approach underscores a concerted effort to revitalize Nigeria’s power sector, offering hope for improved energy reliability and economic growth in the nation.
