Elumelu Praises Tinubu for Committing to Power Sector Reform
…Urges Government to Settle N2 Trillion Debt to Power Companies
By Patience Ikpeme
The Chairman of Transnational Corporation (Transcorp Group), Mr. Tony Elumelu, has commended President Bola Ahmed Tinubu for approving the gradual payment of power sector debts estimated at over N3.3trillion
He also made a strong appeal to the federal government to expedite action to settle the over N2 trillion owed by the Nigerian Bulk Electricity Trading Plc (NBET) to power generation companies (GENCOs).
At Transcorp Group’s 2023 Annual General Meeting in Abuja on Monday, Mr. Elumelu emphasized the importance of financial stability in the power sector to maintain a reliable electricity supply. He highlighted that the significant debt, including N250 billion owed to Transcorp Group alone as of March 2024, is causing severe disruptions in the sector.
Despite these debts, GENCOs continue to produce electricity, effectively subsidizing the industry. This situation limits their ability to pay gas suppliers, leading to reduced and unreliable gas supplies, which is problematic since 80 percent of Nigeria’s power comes from gas-fired plants.
Mr. Elumelu commended President Bola Ahmed Tinubu’s commitment to addressing these debts but urged quick action to convert promises into actual payments. He underscored the need for a stable gas supply and suggested several measures, including providing incentives for GENCOs to produce gas for power generation, enforcing a domestic gas delivery obligation, and reconsidering the pricing of gas in U.S. dollars by proposing partial indexation to the Nigerian Naira.
Addressing the critical issue of metering, Mr. Elumelu praised the Presidential Metering Initiative (PMI) launched in November 2023. He urged the government to set and enforce clear timelines for metering milestones to ensure revenue assurance and customer trust.
On energy theft, he pointed out its detrimental impact on distribution companies (DISCOs) and the wider power sector. He recommended establishing special courts for speedy trials of energy theft cases and implementing a “name and shame” policy for convicted thieves to deter such activities.
Mr. Elumelu also called for the completion of the power sector’s privatization, which started in 2012 but remains incomplete. He stressed that full privatization is essential for efficiency and economic growth. Currently, the Transmission Company of Nigeria (TCN) is still wholly government-owned, and the government holds a 40 percent stake in DISCOs as well as interests in several GENCOs. He suggested that the government establish a clear timeline for full privatization, starting with the DISCOs and TCN, to enable more efficient private sector management.
Discussing Transcorp Group’s financial performance in 2023, Mr. Elumelu reported remarkable growth. The company’s market capitalization surged by 604 percent, from N50 billion at the beginning of 2023 to N577 billion by the end of March 2024. The combined market capitalization of Transcorp Group on the Nigerian Exchange rose from N114 billion to over N4.4 trillion in the same period.
Transcorp’s gross earnings for the year increased by 47 percent, from N134 billion in 2022 to N197 billion in 2023. The company’s profit before tax almost doubled, rising from N30 billion in 2022 to N59 billion in 2023. Total assets grew by 20 percent, reaching N530 billion, driven by increased operating revenue and cash flow. Shareholders’ funds increased by 21 percent, from N155 billion to N187 billion, mainly due to retained profits.
Mr. Elumelu noted that total liabilities grew by 19 percent, from N288 billion to N343 billion, attributing this to substantial investments that resulted in robust growth, particularly in the power sector.
Additionally, Transcorp achieved significant success in the hospitality sector. The average occupancy rate of their hotels increased from 78 percent in 2022 to 81 percent in 2023, with an average daily rate of N139,000.
