Oil and gas operators have raised the alarm over Nigeria’s electricity and gas pricing structure, warning that failure to adopt cost-reflective tariffs could leave the country’s gas-to-power sector with a crippling N6 trillion debt burden, especially if generation expands to 10,000 megawatts.

Speaking on the sidelines of the Nigerian Oil and Gas (NOG) Energy Week in Abuja yesterday, industry stakeholders stressed that the sector risks chronic underfunding, which could derail efforts to achieve a stable and reliable power supply.

This comes as the Federal Government has issued a firm warning to oil firms hoarding or underutilising their allocated resources even as players gave conditions to attain the target of three million barrels per day of oil production.

According to data drawn from the Nigerian Electricity Regulatory Commission (NERC), the current average electricity tariff of N116 per kilowatt-hour is far below what is required to sustain the sector.

Analysts projected that a more realistic tariff, something close to current Band A, which is about N204 per kilowatt-hour, is needed to provide sufficient liquidity for investments, infrastructure upgrades, and timely payment to gas suppliers.

The players also insisted that the government could not continue to control the price of gas through legislation, stressing that unless the current fundamental pricing imbalance is addressed there is hope of financing gas supply sustainably or encouraging investments needed to support increased gas generation.

Industry participants at the conference further argued that Nigeria has not yet removed the structural bottlenecks blocking fresh investment into its oil and gas sector. These include infrastructure constraints, insecurity in host communities and uncertainty around regulatory frameworks.

Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, told delegates at the Abuja event, organised by dmg Event, that any operator sitting on dormant fields must either develop them or relinquish their licences.

He noted that the newly-restructured Nigerian National Petroleum Company Limited board had been tasked to review operatorship arrangements and ensure that oil assets are put to productive use.

“The government has done a lot and is willing to do more, but the results must now speak for themselves,” the minister added, warning that licences would be withdrawn from non-performing operators.

In a related intervention, the Chairman of the Independent Petroleum Producers Group (IPPG), Abdulrazaq Isa, said Nigeria’s ambition to lift crude oil production to three million barrels per day remains feasible provided stakeholders move decisively to harness recent reforms and asset transfers.

Isa described the moment as a “critical phase” for Nigeria’s energy sector, pointing out that the bulk of incremental oil and gas output would come from assets recently divested in onshore and shallow water acreages.

“These assets are now primarily in the hands of IPPG members, who have already begun implementing strategic plans to ramp up production,” Isa explained.

However, he warned that significant and consistent financing would be vital to support these plans, along with strengthening partnerships in host communities, developing technical skills and collaborating with local service providers.

He commended ongoing reforms, particularly the transformation of NNPC Limited and implementation of the Petroleum Industry Act PIA), describing the current scenario as a “golden opportunity” that must not be wasted.

In a keynote delivered virtually, OPEC Secretary General, Haitham Al Ghais, reinforced the call for urgent investment and collaboration to ensure Africa’s energy future.

Al Ghais praised Nigeria’s leadership within OPEC but warned that continued underinvestment could leave global markets with a deficit of up to 23 million barrels of oil per day by 2030.

Citing a cumulative investment requirement of $17.4 trillion in the oil sector by 2050, Al Ghais highlighted that all energy sources, especially hydrocarbons, will be necessary to meet growing global demand projected to expand by 23 per cent over the next 25 years.

He quoted an African proverb to stress the need for partnerships: “If you want to go fast, go alone.”

Al Ghais also pointed to innovation and cleaner hydrocarbon technologies as essential parts of the solution, noting that many OPEC members already rank among the least carbon-intensive producers globally.

To increase efficiency, the Nigerian Independent System Operator (NISO) has reaffirmed its commitment to digitising the national electricity grid and joining the regional grid synchronisation efforts led by the Economic Community of West African States (ECOWAS).

This comes as Nigeria remains one of the only countries in the region yet to connect its grid to the West African Power Pool (WAPP).

Speaking at the official unveiling of NISO’s new corporate identity in Abuja, the Chief Executive Officer, Abdu Bello Mohammed, said the event marked a significant milestone in Nigeria’s power sector reform.

He stressed that the unveiling of the organisation’s logo, mission, vision and core values was not just a ceremony but also marked an era of transparency, neutrality and efficiency in grid management.

“The NISO did not emerge from thin air. It was born out of reform mandated by law and driven by a national imperative,” Mohammed stated, referencing the Electricity Act of 2023, which established the organisation as an independent system operator, distinct from the Transmission Company of Nigeria (TCN).

The act, which repealed the 2005 Electric Power Sector Reform Act, mandates the Nigerian Electricity Regulatory Commission (NERC) to ensure the independence of system operation from transmission services.

This, according to Mohammed, allows the NISO to coordinate the grid and the electricity market fairly and without bias.

“What does it mean to be truly independent? It means we coordinate the grid without fear or favour, serve all market participants fairly, and plan proactively for a sustainable future,” he said.

Mohammed emphasised that Nigeria could no longer afford to operate in isolation while the rest of West Africa pushed for greater grid integration.

He reaffirmed NISO’s intention to actively participate in regional energy planning through institutions like WAPP.

On technology, the CEO announced the launch of a digitisation and automation drive in partnership with Huawei. This will include real-time system monitoring, smart analytics and a modern SCADA/EMS infrastructure.

“This is the kind of progress that turns institutions from reactive to proactive,” he said.

NISO’s newly unveiled mission is to “manage Nigeria’s electricity grid with reliability, efficiency and transparency, enabling a sustainable and competitive power sector that drives economic growth and improves quality of life”.