Mr. Peter Ikenga, the Managing Director of Transcorp Power Plant, revealed that because distribution companies in Nigeria were unable to absorb the full load generated by their plants, the company had to turn to the international market for assistance. He believes selling electricity outside of Nigeria, where there is a shortage, goes against his principles. However, the company is focused on maximising power production from its plant. During the Investors Online Conference for Transcorp Power Plc, Ikenga discussed the potential for surpassing local power demand despite sector challenges.
The grid’s limitations sometimes result in a situation where distribution companies cannot fully absorb the load, leading to excess power generation and a lack of electricity storage capacity. He clarified that all energy produced must be used immediately. According to him, they began noticing excess capacity in the plant that needed to be used in the local area. Their search for a market beyond national borders led them to export excess generated power not utilised on the grid. The industry is facing a structural problem they want to avoid, which is a situation where they need help to utilise their plant capacity due to weak demand.
Revenue increases due to higher energy delivery and capacity charges.
During the financial presentation, Mr. Evans Okpogoro, the company’s Chief Finance Officer (CFO), mentioned that revenue has significantly increased in the last five years due to rising energy delivery and capacity charges. He stated that Transcorp Power ended the financial year of 2023 with total earnings of ₦142 billion, showing an increase of 57.30 percent compared to the previous year. Increased revenue is attributed to a rise in energy distribution and capacity fees and the company’s entrance into global markets, which contributed 18 percent of total revenue.
Also, the EBITDA margins of Transcorp Power have steadily increased, rising from 44 percent in FY 2022 to 49 percent in FY 2023. This growth further solidifies its reputation as a top power generation company in Nigeria. The plant’s operational efficiency is evident in the ₦52.8 billion profit before tax, which reflects an impressive 84.4 percent increase compared to the previous year. In FY 2023, the cost-to-income ratio decreased to 63 percent, down from 68 percent in the previous year. The efficiency ratios indicate effective management at the plant, with ongoing efforts to enhance performance for the benefit of stakeholders.
With a 52.3 percent return on equity, Transcorp surpasses expectations.
In January 2024, he announced that Transcorp Power had successfully cleared its US Dollar loan. The company spokesperson confirmed they could fully repay the $215 million syndicate acquisition loan ahead of schedule. Originally, they had anticipated the $1.6 million balance to be cleared by an inflow in December 2023. However, the funds arrived earlier than expected in January 2024, allowing for the prompt repayment of the loan on January 9, 2024. TP will now utilise its foreign currency inflow to fund Capital Expenditure (CAPEX) going forward.
Furthermore, Transcorp Power exceeds expectations with a return on equity of 52.3 percent and a return on assets of 13.5 percent. These figures demonstrate the company’s strong management skills in efficiently utilising assets and delivering significant returns to its investors. Their commitment to their assets remains steadfast, with an annual increase of 32.8 percent in total assets from ₦168 billion to ₦223 billion. Anticipating further growth, they have ambitious plans to inject more capital expenditure (CAPEX) into the grid, aiming to add at least 250MW by FY 2024. Shareholders’ funds have been consistently increasing at 27 percent annually, rising from ₦38 billion to ₦58 billion.
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He mentioned that when calculated with weights applied, the total number of shares would remain at 7.5 billion due to the projected stability of outstanding shares. At the upcoming AGM, shareholders will have the opportunity to approve a dividend of ₦23.4 billion, as the board of directors suggested. This proposed dividend payout of 77 percent complies with the established dividend policy. He explained that Transcorp Power adheres to its annual dividend payment policy. Additionally, a portion of the profits is reinvested in the business due to its durability. Okpogoro emphasised the ongoing expansion of Transcorp Power Plc in revenue and profit. Anticipation is building to release their Q1 2024 interim accounts to the public. This further solidifies their reputation as the top power producer in Nigeria.
Related Link
Transcorp Power Plant: Website
