N2 trillion debt may cripple power sector, Elumelu warns

•‘GenCos subsidising electricity supply’
•Transcorp owed N250 billion

The epileptic power supply in the country has been attributed to the inability of the Electricity Trading PLC (NBET) to settle over N2 trillion owed to power generation companies (Gencos).

The Board Chairman of Transcorp Group, Tony Elumelu, disclosed this yesterday in Abuja at the 2023 yearly general meeting of the conglomerate.

He explained that GenCos are technically subsiding electricity supply in the country which is impacting negatively on power supply to homes and industries.

“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 GenCos to end users.

“The distortion in the liquidity flow in the sector is huge and typified by the debt owed to GenCos by NBET, currently over N2 trillion. We are owed N250 billion as of March 2024. Technically, GenCos are subsidizing the sector by continuing to generate power despite the huge debts owed to them. This has impacted negatively on the ability of GenCos to pay their gas suppliers, thereby impacting the quantity and reliability of gas supply to GenCos as well as investment in generation.”

Elumelu observed that only a partial privatisation of the power sector has been achieved since the privatisation exercise commenced in 2012.

With the government owning 100 per cent of Transmission Company of Nigeria (TCN) with 40 per cent shareholding in GenCos and some interest in some distribution companies (DisCos), the sector cannot run efficiently, he said.

He urged the government to establish a project finance regime to enable private sector investors to invest in the completion of ongoing TCN projects under a scheme that would pay back through some tolling arrangement.

For the energy sector to run efficiently, he urged, the federal government should come out with a clear timeline for the full privatisation of the power sector, starting 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 needs in the Nigerian power sector would come with multiple benefits, including the reinstatement of customer trust in operators, revenue assurance and protection and improvement of the integrity of the questionable data with which the sector operates.

Despite the challenges, Transcorp gross earnings for the year grew by 47 per cent from N134 billion reported in 2022 to N197 billion, while profit before tax increased by 94 per cent from N30 billion in 2022 to N59 billion.

Total assets increased by 20 per cent to N530 billion, driven by growth in operating revenue and cash flow.

Shareholders’ funds also grew by 21 per cent from N155 to N187 billion, driven by retained profit for the period.