PUTTRU to FG: How to address gas shortage complaints in Nigeria’s power sector

PUTTRU, Africa’s front line platform, providing expert financing solutions to the continent’s energy sector has urged the new Minister of Power, Joseph Tegbe, who vowed to prioritise availability of gas on assumption of office to consider having the present system restructured into a commercially managed vehicle, where private investors step in at the level of the system to take an active position in future gas supply and settlement.

PUTTRU availed this position through its founder, Monica Maduekwe, a renowned expert who noted that the sector is not suffering from gas shortage but a commercially viable system of sustaining gas supplies to the generating companies, GenCos, in the country.

According to Maduekwe, “Over the past decade, gas has been supplied into the power sector under increasingly uncertain settlement conditions. Generation companies procure on credit. Payments are delayed. Debts accumulate. Suppliers, in turn, scale back or redirect supply to more reliable buyers, including export markets. The result is predictable: gas flows away from the power sector, not toward it.

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“Rather than asking government to carry these obligations, the outstanding payment claims within the gas-to-power value chain, anchored primarily at the generation level, can be restructured into a commercially managed vehicle, where private investors step in at the level of the system, not individual counter parties, to take an active position in future gas supply and settlement.

“In practical terms, this means creating a structure that steps into these validated payment obligations, working alongside existing market operators to restructure and manage them over time, backed by identifiable cash flows within the system. In return, the vehicle secures priority over gas supply arrangements and participates directly in how those flows are priced and settled going forward.”

She further said that “This fundamentally changes the incentive structure. Rather than chasing arrears, our objective must be a functioning market where gas supplied equals gas paid for every single time. The draw for investors is not the fixing of inefficiency, but the opportunity to participate in a constrained and valuable energy flow with commercial upside linked to performance.

“And its execution is not merely theoretical. The debt stock already exists. The counterparties are known. The cash flow points, tariffs, collections, and supply contracts are identifiable. What is required is a restructuring that converts this fragmented exposure into a single, investable framework with defined rights, enforcement mechanisms, and aligned incentives. The Electricity Act 2023 already provides a pathway for this, through NERC’s licensing powers and NBET’s transitional role in the market.”

In order to ameliorate this challenge in the electricity sector the Federal Government, through Presidential Power Sector Debt Reduction Programme, will avail more than N4trillion to bail out generating companies.