The Chairman of Geometric Power and former Minister of Power, Barth Nnaji, has regretted that despite having over 200 trillion cubic feet of proven gas reserves, Nigeria continues to struggle with supplying enough fuel to its power plants.
Speaking at the just concluded Orienta News Nigeria 2025 Conference in Lagos, Nnaji expressed deep concern over what he described as a national contradiction, being rich in natural gas but still failing to meet domestic electricity generation needs.
‘It’s quite perplexing. We are a gas-rich country, yet we struggle to supply enough gas to our power plants. It’s a contradiction that many find hard to understand’, he said
Nnaji, a former Minister of Power, noted that while the official domestic gas price for power generation was formerly pegged at $2.42 per million British thermal units, the Nigerian Midstream and Downstream Petroleum Regulatory Authority revised this down to $2.13/MMBtu effective April 1, 2025.
He said generation companies often source gas from the open market at $2.70 and above, depending on supply constraints and contract terms.
‘Because most electricity is generated using gas, and GenCos depend heavily on sourcing this gas from the open market, the disparity between the regulated and actual prices continues to strain the sector’, Nnaji said.
He warned that the pricing gap is worsening liquidity challenges in the power sector, contributing significantly to the over N1 trillion electricity subsidy recorded in the first half of 2025 and the growing trillion-naira debt owed to GenCos by the Federal Government.
According to him, the gas-to-power benchmark being below market realities places an unsustainable burden on power producers. He also emphasised the need for more cost-reflective electricity tariffs, explaining that the current pricing structure fails to cover the operational and maintenance costs of genCos, particularly as many critical inputs are imported.
‘The energy charge component of the power tariff must be able to cover the cost of maintaining the assets. If operators can’t recover expenses for operations and maintenance, which are often dollar-denominated, there will be recurring system failures.
‘The regulator must continue to adjust the tariff in line with actual industry costs to ensure sustainability’, he posited.
Nnaji further emphasised that Nigeria is not investing adequately in gas production and pipeline transportation infrastructure, calling for greater private sector involvement.
‘Nigeria has all the capacity it needs. Government should remain an enabler, but the private sector must take the lead. If we don’t produce enough gas, even promising initiatives like CNG adoption will not take off’, he stated.
Nnaji noted that most gas-fired power plants in Nigeria suffer from erratic operations due to inconsistent gas pressure and supply, describing this as an unacceptable situation for a nation with abundant gas resources.
He argued that with sufficient gas supply, Nigeria could stabilise its economy and expand into industrial processing such as petrochemicals, creating a diversified energy ecosystem.
He stressed the need for enforceable Power Purchase Agreements and the resolution of issues like vandalism and operational disruptions that hinder gas supply and power offtake.
‘Without a consistent gas supply and proper market design, we can’t expect PPAs to deliver’, he said. On the future of Nigeria’s energy mix, Nnaji said that while hydro and solar power have a role to play, gas-fired power plants will remain the dominant source of electricity for the next one to two decades.
‘Hydro power has its limits in Nigeria due to seasonal variability and geopolitical concerns, particularly as it depends on stable relationships with northern communities and neighbouring countries’, he said.
