PUTTRU, a leading African platform providing expert financing solutions for the continent's energy sector, has called on the newly appointed Minister of Power, Joseph Tegbe, to consider restructuring the current gas supply system in Nigeria's power sector. Tegbe had earlier promised to prioritize gas availability upon assuming office.
Restructuring for Commercial Viability
The advice was conveyed by PUTTRU's founder, Monica Maduekwe, who emphasized that the sector does not face a gas shortage but rather a lack of a commercially viable system to sustain gas supplies to Generating Companies (GenCos). Over the past decade, gas has been supplied to the power sector under increasingly uncertain settlement conditions, she noted.
Maduekwe explained: “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.”
Proposed Solution
She proposed that instead of asking the government to bear these obligations, the outstanding payment claims within the gas-to-power value chain should be restructured into a commercially managed vehicle. This vehicle would allow private investors to step in at the system level, rather than with individual counterparties, 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,” Maduekwe stated.
Changing Incentive Structures
Maduekwe noted that this approach fundamentally changes the incentive structure. The objective must be a functioning market where gas supplied equals gas paid for every single time, rather than chasing arrears. She added: “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.”
She further highlighted that the execution is not merely theoretical. The debt stock already exists, the counterparties are known, and 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.
