The Managing Director of Transcorp Power plant, Mr Peter Ikenga, has disclosed that the company had to resort to the international market because distribution companies in Nigeria, from time to time, are unable to take all the load generated from its plants.
Although according to him, it seems to be a contradiction to sell Electricity outside the shores of Nigeria where electricity is in short supply, the company’s goal is to maximize the power generated from its plant.
Making a presentation at the Investors online Conference held for Transcorp Power Plc on Monday, Ikenga said due to some of the challenges within the sector, “we have a scenario where we actually can generate more power than the demand that we get locally.
“Due to some of the limitations you have on the grid, you have a scenario whereby, you, have distribution companies from time to time unable to take that load, meaning that they are unable to take all the power that we generate and you cannot store electricity.”
He explained that any power generated has to be consumed as it is being generated.
His words, “So, we started seeing some level of stranded capacity within the plant and that stranded capacity cannot be consumed locally.
“We had to look for a market outside the country. So what you find us exporting is typically part of generated power that otherwise was not put on the grid, so to say.
“It is a structural issue within the sector and we do not want a scenario where because of poor demand, we cannot maximise the available capacity that we have within the plant.”
Also, presenting the financial highlights, the company’s Chief Finance Officer (CFO), Mr Evans Okpogoro said the company’s revenue has grown impressively over the past five years, driven by a surge in energy delivery and capacity charge.
According to him, Transcorp Power closed Financial Year (FY) 2023 with gross earnings of N142 billion, representing 57.30 percent year-on-year growth.
The growth in revenue is driven by a surge in energy delivery and capacity charge, coupled with the expansion into international markets and the international market accounted for 18 percent of revenue.
“Transcorp Power continues to sustain and grow its EBITDA margins from 44 percent FY 2022 to 49 percent FY 2023, thereby strengthening its pedigree as one of the leading power generation companies in Nigeria.
“Profit before tax was N52.8 billion representing 84.4 percent year on year growth. This simply shows and tells the operational efficiency of how we run the plant.
“Cost to income ratio reduced from 68 percent FY 2022 to 63 percent FY 2023. All efficiency ratios show that the plant is efficiently managed, and we will continue to improve in this area to increase the returns to all stakeholders, “the CFO stated.
He expressed delight that Transcorp Power has now fully paid off its US Dollar loan in January 2024.
He said the company had a balance of $1.6 million from the $215 million syndicate acquisition loan. It had expected the inflow to come in December 2023 to clear off the balance, but the inflow came in early January 2024 and the full and final loan repayment was made January 9, 2024.
With this, TP’s foreign currency inflow will now be used to finance Capital Expenditure (CAPEX).
Transcorp Power’s return on equity of 52.3 percent and return of assets of 13.5 percent are very impressive for a utility company and simply tell how effective management is sweating the assets and generating returns to investors.
“We continue to invest in our assets, as our total assets grew by 32.8 percent year on year from N168 billion to N223 billion. We expect continued growth in total assets as we plan to invest more CAPEX by bringing back at least additional 250MW in FY 2024 to the grid.
“As we continue to improve our performance, shareholders funds continue to grow by 27 percent year on year from N38 billion to N58 billion, “Okpogoro stated.
However, going forward he said, the weighted average number of shares would be 7.5 billion as it does not expect any changes to the outstanding number of shares.
The board of directors has recommended a dividend of N23.4 billion subject to shareholders rectification at the next AGM. The dividend declared represents a 77 percent payout ratio, which is in line with the dividend policy.
According to him, Transcorp Power continues to maintain its dividend payment policy year on year. Also, because it is built to last, some portion of the profit is plugged back into the business.
Going forward Okpogoro said Transcorp Power Plc continues to grow both its top line (revenue) and its bottom line (profit) and “we are excited and eager to release our Q1 2024 interim accounts which would be in the public shortly which underscores our pedigree as the leading power generating company in Nigeria.”
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