The country’s inconsistent power supply is due to the Electricity Trading PLC (NBET) being unable to pay over N2 trillion owed to power generation companies (GenCos).
Tony Elumelu, Chairman of the Board of Transcorp Group, shared this information yesterday in Abuja during the 2023 annual general meeting of the conglomerate.
He noted that GenCos are effectively subsidizing electricity, which negatively affects the power supply to homes and industries. The power sector relies on a cycle that ensures financial liquidity and payment guarantees, which in turn maintains a steady flow of electricity from GenCos to consumers,” Elumelu explained.
The significant disruption in the sector’s liquidity flow is evident in the debt owed to GenCos by NBET, which is currently over N2 trillion. As of March 2024, we are owed N250 billion. GenCos are essentially subsidizing the sector by continuing to produce power despite these large debts. This situation has negatively affected GenCos’ ability to pay their gas suppliers, impacting both the quantity and reliability of gas supply and hindering investment in power generation.
Elumelu pointed out that only a partial privatization of the power sector has been achieved since the process began in 2012.
With the government owning 100% of the Transmission Company of Nigeria (TCN) and holding a 40% stake in GenCos and some interest in certain distribution companies (DisCos), the sector cannot operate efficiently. He called on the government to establish a project finance regime to enable private sector investment in completing ongoing TCN projects, to be paid back through a tolling arrangement.
To ensure the energy sector operates efficiently, he urged the federal government to set a clear timeline for the full privatization of the power sector, beginning with the DisCos and TCN.
“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,” he stated.”
He explained that addressing the metering issues in Nigeria’s power sector would have several benefits. These include restoring customer trust in operators, ensuring and protecting revenue, and improving the accuracy of the sector’s data.
Despite the challenges, Transcorp’s gross earnings for the year increased by 47%, rising from N134 billion in 2022 to N197 billion, while profit before tax jumped by 94% from N30 billion in 2022 to N59 billion.
Total assets grew by 20% to N530 billion, driven by higher operating revenue and cash flow.
Shareholders’ funds also increased by 21%, from N155 billion to N187 billion, due to retained profit for the period.
