Elumelu Urges FG to Pay N2tn Debts Owed to GENCOs to Avert Power Sector Collapse

•Hails Tinubu for power sector reforms, seeks full privatisation  

•Assures shareholders post consolidation will not lead to share dilution, acquisition loan for Transcorp Power completely settled

•Plans to increase generation capacity 908 megawatts in 2024, seeks special courts to address energy theft

James Emejo in Abuja

Chairman, Transnational Corporation Plc, Mr. Tony Elumelu, yesterday urged the federal government to walk the talk by expediting payment of the over N2 trillion debts owed to power generation companies (Gencos) in the country.

He said out of the indebtedness, TransAfam Power, a leading generating firm owned by Transcorp Power is owed N250 billion.

Speaking at the 18th annual general Meeting (AGM) of the corporation in Abuja, Elumelu said the debts had continued to impact negatively on the ability of the generation companies to pay their gas suppliers, thereby impacting the quantity and reliability of gas supply to the former as well as investment in generation.

He stated that the distortion in the liquidity flow in the sector remained huge and typified by the debt owed to Gencos by the Nigerian Bulk Electricity Trading Plc (NBET) was currently over N2 trillion.

Yet, Elumelu said the power sector was designed to function in a cycle that ensures liquidity flow and payment assurance, which in turn sustains the reliable flow of electricity from power generation companies to end users.

While commending the power sector reforms introduced by President Bola Tinubu, he said, “I therefore, welcome recent pronouncements by the federal government affirming its commitment towards paying the debt owed to the Gencos. I urge speedy implementation of actions necessary to translate the pronouncements to achievements”.

This came as the Transcorp chairman further allayed shareholders’ fears that the post-consolidation of the banking sector could lead to significant asset dilution.

He also declared to the excitement of shareholders that the dollar–denominated acquisition loan for Transcorp Power had been settled 100 per cent.

He said, “In 2024, we plan to continue the strong group’s financial performance by maximising the potential of our subsidiary businesses, leveraging innovation, enhancing brand equity, and exploring business expansion opportunities into other key sectors.

Elumelu also said the corporation planned to increase and maintain its combined available generation capacity to 908 megawatts this year from 710 megawatts in 2023.

Furthermore, he said, “We plan to take advantage of the bilateral power sale opportunities arising from the enactment of the 2023 Electricity Act by entering into agreements with strategic electricity distribution companies and eligible customers.

“In addition, we will further consolidate the existing benefits from our membership of the West African Power Pool by increasing our share of the regional electricity market.”

Elumelu said energy theft remained a huge setback and frustrating factor for distribution companies (DISCOs) and the power sector, adding that apart from the loss of revenue resulting directly from stolen electricity, Discos also suffer significant losses and damages due to vandalisation of their infrastructure in the course of energy or infrastructure theft.

He called for establishing special courts with powers for summary proceedings to exclusively deal with energy theft cases.

He said, “While I note the provisions of the Electricity Act 2023 regarding criminal punishment for energy theft. I recommend the establishment of special courts with powers for summary proceedings to exclusively deal with cases of energy theft. There should also be a process of naming and shaming convicted energy thieves irrespective of their status in the society.”

He also called for the full privatization of the power sector, noting that only a partial privatisation of the sector had been achieved since the exercise commenced in 2012.

He said” As of today, TCN is owned 100 per cent and Discos ore owned 40 per cent by the federal government, who also holds ownership interests in some Gencos. To enable the sector to be efficiently run by the private sector, I recommend that the federal government should come out with a clear timeline for the full privatisation of the power sector, starting with the Discos and Transmission Company of Nigeria.”

Elumelu said, “I look forward to a fully reformed and unleashed Nigerian power sector, fully contributing, as it must, to Nigeria’s economic renaissance and social rebirth.

“…I take considerable pride in our accomplishments in 2023, and I am confident in our ability to sustain growth and generate additional value in the future.”

In her remarks, President/Group Chief Executive, Transcorp, Dr. Owen Omogiafo, said the key priority for 2024 was to surpass set targets for the year across the various operating segments.

She said, “We will remain resolute as we executive our strategic priorities in 2024. Our achievements in 2023 reflect our ongoing progress towards fully optimising and transforming our businesses.

“We are strategically positioned to take advantage of the opportunities that exist within the sector we currently operate in, as well as explore further opportunities for business expansion due to our strong financial foundation.

“Looking ahead, I remain optimistic about the future of Transcorp Group. Our agenda for 2024 focuses on growth, operational excellence, financial resilience, and sustainable development. We are committed to creating lasting value for all stakeholders through operational excellence.”

In 2023 Transcorp Plc grew its market capitalisation by 604 per cent from N50 billion at the beginning of 2023 to N557 billion at March 2024.

Also, Group’s combined market capitalisation on the Nigerian Exchange stood at over N4.4 trillion in Q1 2024 from N114 billion in 2023.

Transcorp’s gross earnings for the year grew by 47 per cent from N134 billion reported in 2022 to N197 billion while profit before tax increased by 94 per cent from N30 billion in 2022 to N59 billion in 2023.

Total assets increased by 20 per cent to N530 billion, driven by operating revenue and cash flow growth as shareholders’ funds grew by 21 per cent from N155 billion to N187 billion, driven by retained profit for the period.

Total liabilities increased by 19 per cent, from N288 billion to N343 billion, during the year.