Despite continuing uncertainty in our operating environment, the Transcorp Group and subsidiaries recorded increased earnings and cashflow for the year, driven by a strong corporate governance culture, commitment to sustainability, and consistent focus on improving the wellbeing of our people.
This excellent performance reflects the commitment of our Board of Directors, management team and all employees, and our dedication to creating value for the long-term, improving lives, and transforming our sectors of operations. Our business has clearly demonstrated the potential of our philosophy – Africapitalism, its capacity to uplift people and create shared prosperity. I am immensely proud of Transcorp’s value creation and how we have consistently maintained our position as one of Africa’s leading conglomerates.
In 2023, Transcorp Plc grew its market capitalisation by 604% from N50 billion at the beginning of 2023 to N577 billion as at the end of March 2024.
Since the beginning of 2023 to date, we have grown our Group’s combined market capitalisation on the Nigerian Exchange from N114 billion to over N4.4 trillion as at the end of Q1, 2024.
The acquisition of a 60% stake in Abuja Electricity Distribution Company (AEDC) by a consortium led by Transcorp, marks a significant and strategic investment addition to our power portfolio. The highly experienced team, that has been put in place, are committed to driving a successful business transformation.
Power is the engine behind every industrialised and developed nation. Power must therefore be prioritised as a critical aspect of our nation’s transformation agenda. We need power to light up our homes, run businesses, and boost the output of our industries. Where power, the basic requirement of every thriving nation, remains unreliable, our nation cannot move forward.
It is disheartening to witness the current situation in our industry, that is crippling and impeding the power sector.
While our subsidiary, Transcorp Power, has recorded significant milestones during the year under review despite the challenges, we need our Federal Government’s intervention to tackle the significant issues in the system and unlock the value inherent in the power sector.
There are critical challenges our nation must address to fix the power sector – they cut across the entire power ecosystem from generation, transmission, to distribution:
Liquidity
The power sector is 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 (“GENCOs”) to end users. The distortion in the liquidity flow in the sector is huge and typified by the debt owed GENCOs by Nigerian Bulk Electricity Trading Plc (“NBET”), currently in excess of N2 trillion. We are owed N250 Billion as at March 2024. Technically, the GENCOs are subsidizing the sector by continuing to generate power despite the huge debts owed them. This, obviously, has impacted negatively on the ability of the GENCOs to pay their gas suppliers, thereby impacting the quantity and reliability of gas supply to the GENCOs, as well as investment in generation. I therefore welcome recent pronouncements by the Federal Government of Nigeria affirming its commitment towards paying the debt owed GENCOs. I urge a speedy implementation of actions necessary to translate the pronouncements to achievements.
Gas Supply
The unavailability of reliable natural gas supply remains one the biggest challenges of GENCOs and by extension, the power sector. The impact of gas-related challenges on the sector is significant, given that approximately 80% of power generated into the national grid is from gas-fired generation plants. I recommend the following as solutions that would help address the gas challenge:
- Incentives should be developed for GENCOs who are willing to explore gas production for power generation.
- A special domestic gas delivery obligation to the Nigerian power sector should be mandated for gas producers and effectively enforced.
- The indexing of gas to power pricing in USD should be reconsidered. Where full pricing in NGN is considered not feasible, partial indexation in USD should be implemented. This will reduce volatility in electricity tariffs, especially as the sector moves towards cost-reflective tariffs.
Transmission Challenges
Inadequate and weak transmission infrastructure, numerous uncompleted transmission projects, inappropriate alignment of transmission projects to distribution needs and manpower development challenges are all responsible for the significant transmission challenges impacting the supply of power from GENCOs to end-users, through power distribution companies (“DISCOs”).
I must acknowledge that the separation of System Operator (SO) from the Transmission Service Provider (TSP) recently announced by NERC, would, if effectively implemented, position the TSP under TCN to focus more on the improvement of transmission infrastructure across Nigeria.
In addition, I recommend that:
- The Honourable Minister of Power and NERC must work together to rationalise transmission projects for completion, with consideration for maximum impact on service delivery.
- A project finance regime be put in place to enable private sector investors invest in the completion of ongoing TCN projects under a scheme that would payback through some tolling arrangement regarding energy transmitted through such completed projects.
Metering
Addressing the metering needs in the Nigerian power sector would come with multiple benefits, including the reinstatement of customer trust in operators, revenue assurance and protection, improvement of the integrity of the questionable data with which the sector operates. The announcement of the Presidential Metering Initiative (PMI) in November 2023, was highly welcomed, as the Initiative was meant to harmonise the numerous meter provision programmes that existed in the country and eliminate the confusion associated with them.
As the entire sector, and indeed, the Nigerian economy await the effective metering execution, that should result from the implementation of the urgent PMI, I urge the Federal Government to institute and enforce clear timelines for completing the phased metering milestones which are part of the mandates of the PMI. This is a critical step in achieving the President’s agenda for a viable and sustainable power
sector for all Nigerians.
Energy theft
Stealing of energy has continued to be a big setback and frustrating factor for the DISCOs, and by extension, the power sector. Besides the loss of revenue resulting directly from stolen electricity, DISCOs also suffer significant losses and damages due to vandalization of their infrastructure in the course of energy or infrastructure theft.
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.
Non completion of power sector privatization
Only a partial privatization of the power sector has been achieved since the privatization exercise commenced in 2012. As of today, TCN is owned 100% and DISCOs are owned 40% by Federal Government, who also holds ownership interests in some GENCOs. To enable the sector to be efficiently run by 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. 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.
Appreciation
Transcorp’s success in 2023 would not have been possible without the support of many.
I thank my colleagues on the Board for their dedication and commitment. Let me also extend special appreciation to the leadership of Transcorp Group:
- President/Group CEO, Dr. (Mrs.) Owen D. Omogiafo, OON
- CEOs of our subsidiary companies:
- Dupe Olusola (Transcorp Hotels Plc),
- Vincent Ozoude (Transafam Power Ltd),
- Peter Ikenga (Transcorp Power Plc),
- Chris Ezeafulukwe (Transcorp Energy), and
- The entire executive management team.
Additionally, I am grateful to our stakeholders for their unwavering support and our shareholders for their trust in Transcorp.
On behalf of the Board of Directors, I also want to express our collective gratitude to the entire staff of Transcorp Plc for their ongoing dedication to executing our business strategy and creating value for all stakeholders.
In conclusion, 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.
Thank you.
