Turning Waste to Watts: How Gas Flaring Hampers Nigeria’s Power Generation and What Can Be Done

“Nigeria’s Gas-to-Power Sector: Challenges, Innovations, and the Path to Sustainable Growth”

Nigeria, blessed with some of the world’s largest natural gas reserves, stands at a critical crossroads in its quest for reliable and sustainable electricity. Despite possessing over 200 trillion cubic feet of proven gas reserves, the country continues to grapple with chronic power shortages, frequent blackouts, and a struggling electricity sector. The paradox is stark: while millions of Nigerians endure unreliable electricity, vast quantities of natural gas are wasted through flaring, and the sector is hamstrung by supply disruptions and financial bottlenecks. Yet, amidst these challenges, innovative solutions and new investment opportunities are emerging, offering hope for a brighter, more electrified future.

Gas Flaring: Unlocking Lost Power Generation Potential and Environmental Solutions

One of the most glaring inefficiencies in Nigeria’s energy landscape is gas flaring-the practice of burning off associated gas produced during oil extraction. In the first quarter of 2025 alone, Nigeria lost an estimated $345.9 million to gas flaring. This is not just an economic tragedy; it’s a missed opportunity to generate thousands of megawatts of electricity and an environmental crisis of global proportions.

Gas flaring releases vast amounts of greenhouse gases and toxic pollutants, contributing to climate change and causing severe health problems in communities near oil fields. Despite decades of government pledges and regulatory efforts, Nigeria remains among the world’s top gas-flaring nations. The irony is inescapable: while the country’s power plants struggle to find enough fuel, enough gas to power millions of homes is literally going up in smoke.

The causes of persistent gas flaring are complex. Infrastructure deficits, such as inadequate gas gathering and processing facilities, hinder the commercialisation of flared gas. Regulatory bottlenecks and a lack of investment further complicate the picture. Additionally, payment shortfalls and debts in the power sector discourage investment in gas-to-power projects, perpetuating the cycle of waste.

Recent policy initiatives, such as the Nigeria Gas Flare Commercialisation Programme (NGFCP), offer a glimmer of hope. By incentivising private companies to capture and utilise flared gas, these programmes can transform a liability into an asset. Unlocking the potential of flared gas could not only boost Nigeria’s electricity supply but also attract investment, create jobs, and significantly reduce greenhouse gas emissions. The path forward requires coordinated action from government, industry, and communities to turn wasted gas into a powerful driver of sustainable development.

Gas Supply Challenges and Payment Issues: The Achilles’ Heel of Gas-to-Power

While gas flaring wastes valuable resources, the gas that does make it to Nigeria’s power plants faces its own set of hurdles. Over 70% of Nigeria’s electricity is generated from gas-fired power plants, yet these facilities often operate far below their capacity due to erratic gas supply. The causes are manifold: frequent pipeline vandalism, aging infrastructure, and insufficient investment in gas gathering and transportation networks. When pipelines are sabotaged or under-maintained, gas cannot reach power stations, leading to widespread blackouts and forced load shedding.

Compounding these technical and security challenges is a financial crisis that plagues the entire power sector. Gas suppliers are owed billions of naira by electricity generation companies (GenCos), who themselves struggle to collect payments from distribution companies (DisCos) and end-users. This cascading debt discourages gas producers from investing in new infrastructure or even maintaining current supply levels, as they face uncertainty about getting paid for their product. The result is a fragile system where power plants are frequently starved of fuel, and the entire value chain suffers.

The government has attempted to address these issues through reforms such as the Nigerian Electricity Market Stabilisation Facility and efforts to improve metering and revenue collection. However, progress has been slow, and the sector remains vulnerable. Without a sustainable solution to the payment and supply conundrum, Nigeria’s dream of reliable, affordable electricity for all will remain elusive.

Addressing these challenges requires a multi-pronged approach: securing pipelines, investing in infrastructure upgrades, improving revenue collection, and enforcing payment discipline throughout the value chain. Only then can Nigeria break the cycle of underperformance and unlock the full potential of its gas-to-power sector.

Innovations and Investment Opportunities: Turning Challenges into Growth

Despite these daunting challenges, Nigeria’s gas-to-power sector is witnessing a wave of innovation and renewed investor interest. The Nigeria Gas Flare Commercialisation Programme (NGFCP) is at the forefront, creating opportunities for both local and international investors to develop modular gas processing plants, compressed natural gas (CNG) facilities, and small-scale liquefied natural gas (LNG) projects. These innovations not only reduce greenhouse gas emissions but also create new revenue streams and jobs across the value chain.

Another promising development is the rise of captive and embedded power solutions. Industries and communities are increasingly developing their own gas-powered mini-grids, independent of the national grid. This approach is particularly attractive in Nigeria’s industrial clusters, where reliable power is critical for productivity. By leveraging modular gas turbines and innovative financing models, companies can bypass traditional bottlenecks and deliver energy directly to end-users.

The sector is also attracting significant international attention. Multilateral institutions like the African Development Bank (AfDB) and the World Bank are investing in gas infrastructure, while global energy companies are exploring partnerships for technology transfer and capacity building. These investments are crucial for upgrading pipelines, expanding gas processing capacity, and modernising power plants.

However, to fully realise these opportunities, Nigeria must address regulatory uncertainties, streamline project approvals, and ensure transparent market operations. The government’s recent moves to liberalise the electricity market and encourage state-level participation in power generation are steps in the right direction, but consistent implementation and stakeholder engagement are essential.

The Path Forward: Harnessing Nigeria’s Gas-to-Power Potential

Nigeria’s gas-to-power sector stands at a pivotal moment. The challenges of gas flaring, supply disruptions, and financial instability are real and pressing, but they are not insurmountable. With the right mix of policy reforms, infrastructure investment, and innovative business models, Nigeria can transform its abundant gas resources into a reliable source of power, economic growth, and environmental sustainability.

Key to this transformation will be a relentless focus on capturing and utilising flared gas, securing and expanding gas supply infrastructure, and creating a financially viable electricity market. By fostering collaboration between government, industry, and communities, and by embracing innovation and investment, Nigeria can turn its gas-to-power sector from a story of lost potential into a beacon of progress for Africa and the world.

In conclusion, the journey to a brighter, more electrified Nigeria hinges on overcoming old challenges with new solutions. The opportunities are vast, the stakes are high, and the time for action is now.