The Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority has said that most power generation companies in Nigeria do not have bankable and enforceable gas sales agreements with suppliers, a situation he linked to persistent electricity supply challenges, the regulator said in a statement.
Nigeria’s electricity sector comprises generation companies (GenCos), transmission infrastructure and distribution companies.
Although the country produces significant natural gas and has substantial installed generation capacity, electricity supply has consistently fallen short of demand over the past two decades.
The regulator’s comments came amid ongoing discussions among energy stakeholders about the performance of the gas-to-power value chain and structural constraints affecting power delivery.
Engr. Saidu Mohammed, Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), said Nigeria produces about eight billion standard cubic feet of gas daily and exports significant volumes through the Nigeria LNG export facility.
He noted that despite this gas output and over 13,000 megawatts of installed generation capacity, actual electricity supply in Nigeria has stagnated at around 5,000 megawatts for more than two decades.
Mohammed identified the lack of commercially viable gas contracts between suppliers and most GenCos as a major factor.
He said only “one or two power plants” currently have bankable gas sales agreements and explained that without firm buyers and credible payment structures, gas molecules will not flow to power plants.
He described the recurrent “no gas” challenge reported by power plants as largely linked to weak commercial arrangements rather than a shortage of gas resources or generation capacity.
The regulator’s statement highlights a structural issue within Nigeria’s gas-to-power value chain, where commercial arrangements are seen as critical to ensuring reliable gas supply to power generators.
Without bankable contracts that specify credible demand commitments and secure payment terms, power generation companies may continue to face uncertainty around gas supply, which can constrain output and contribute to ongoing electricity supply challenges.
This situation may also influence investor confidence in the power sector, as stable and enforceable purchase agreements are a key factor for financing and long-term planning in energy infrastructure.
