Transcorp Power Plc’s quarter one (Q1) result painted a picture of an energy company that is not only weathering the storm of economic uncertainties but also pointing to the transformative investment opportunities in its sector, GEOFF IYATSE and KINSGLEY JEREMIAH write.

It is a tough time to operate in the Nigerian business environment. With different companies grappling with multiple macroeconomic headwinds including inflation, high cost of funds and a volatile naira, this is one of the most challenging times in decades to operate in the local economy. Besides the challenges, power generation companies have had to find a way to circumvent hostility, gas supply constraints and foreign exchange-dominated transaction challenges to survive.

Yet, the last quarter was an extraordinary operating period for Transcorp Power Plc, a subsidiary of Transnational Corporation Plc. Across the top and bottom-line metrics, Transcorp Power posted impressive growth in Q1 that gave it out as a company in a boom cycle even though Nigeria is on a recession precipice. First, its revenue was by as much as 55 per cent, a rare feat in the utility sector. It grew from N67.86 billion to N105.44 billion on a year-on-year (YoY) basis. By every measure, above 50 per cent, expansion in gross earnings is a remarkable performance.

With the cost of sale kept relatively low at N50.4 billion, its operating profit, riding on operational efficiency and innovative operation, closed the quarter at N55 trillion or 41 per cent above Q1 2024 performance. But at N44.54 billion compared to N29.4 billion, the operating profit growth was even higher at 51.5 per cent, a performance driven by increased efficiency and sustained investment in technology, which has reduced the growth of cost operation.

The company, at 42.2 per cent, was able to sustain above 40 per cent operating margin. It was consistent with its performance in the comparative quarter when the operating margin was 43.3 per cent. In revenue and profit, the company demonstrated resilience and demonstrated its commitment to charting a new path.

Its peers, Geregu Power Plc, recorded a decline in both revenue and profit. The modest drop in the cost of sale of Geregu– from N22 billion to N19.7 billion – could not reverse the decline in profit, which slipped from N21.77 billion to N14.67 billion in the quarter.

In the quarter, Transcorp Power’s earnings per share (EPS) jumped by 62 per cent to N4.35, signalling a bullish catalyst for the energy company with many analysts placing it on ‘buy’. The company is also aggressively growing its assets. YoY, its assets rose from N396.78 billion to N447, a 13 per cent growth.

Analysis of the result also puts the current assets at N360.7 billion at the close of March while the current liabilities were valued at N 263.54 billion. With the current assets to current liabilities ratio at 137 per cent, the company has demonstrated its ability to meet short-term obligations. The snail growth of the current liabilities, by 15 per cent in Q1, is also revealing of the company’s short-term stability. Within the period, the current assets were up by 16 per cent, from N309 billion to N360.7 billion.

Transcorp Power’s impressive performance sits in a broader move to increase the efficiency of the power sector. Other generation companies have recently announced ramping up of generation capacity, pushing Nigeria’s total installed capacity to over 13,000 megawatts (MW). Across the board, investors have repeatedly echoed to the government the need to ensure that all market players meet their key performance indicators (KPIs), arguing that doing so would improve service delivery for consumers and enable investors to recover their capital sustainably while supporting the larger economy to grow faster.

The growth in key indicators of Transcorp Power was fuelled by a significant increase in available generation capacity from 500 megawatts (MW) in the first quarter of 2024 to 625MW in the first quarter of 2025, representing a 25 per cent improvement in operational efficiency and capacity utilisation.

The implications are that, while the generation companies have recently threatened to shut down over industry risk and legacy debts, improving their generation capacity is important to their financial sustainability, especially if the government, through the Transmission Company of Nigeria (TCN), strengthens its evaluation capacity.

Transcorp Power’s latest results, although unaudited, also paint a picture of disciplined execution amid sector-wide uncertainty. The N105.4 billion revenue figure reflects a strong offtake of generated power, made possible by consistent gas supply and plant reliability, two factors often cited as major constraints for Nigeria’s struggling GenCos.

A close analysis of the figures equally suggests that the Nigerian electricity sector must strive towards cost control and streamlined operations as this played a crucial role in delivering the N43.3 billion pre-tax profit. The profit margin expansion to investments in automation, predictive maintenance and energy efficiency programmes are said to have helped Transcorp Power offset rising costs in the gas and logistics value chain.

President and Group CEO of Transnational Corporation (Transcorp), Dr Owen Omogiafo, had noted that the conversation around energy transition in Nigeria must prioritise access, which her company would want to drive.

“Our focus must be on refining our current systems, enhancing energy efficiency, and ensuring that progress towards sustainability does not neglect critical infrastructure that communities depend on for basic needs,” Omogiafo explained, adding that Transcorp is addressing the issues through investments in accessible, affordable and sustainable energy.

Managing Director and CEO of Transcorp Power, Peter Ikenga attributed the strong financial performance to reliability, efficiency and resilience.

“We delivered a strong performance in the first quarter, reflecting our disciplined execution, reliable operations, and unwavering focus on efficiency. Transcorp Power is one of Nigeria’s principal power generation companies and an electricity generating subsidiary of Transnational Corporation Plc, Africa’s leading, listed conglomerate, with strategic investments in the power, hospitality and energy sectors. Transcorp Power is committed to creating value, driving economic growth and ensuring social goods, through access to electricity supply,” Ikenga said.

According to him, despite the challenges impacting the sector, GenCos continue to optimise generating capacity and remain firmly committed to delivering long-term value for shareholders while powering progress across Africa.

Transcorp Power has pledged to continually invest in upgrading its infrastructure and adopting new technologies. Its commitment to innovation also ensures that it remains at the forefront of the power generation industry.

With a combined installed capacity of approximately 1,000 MW and accounting for 7.14 per cent of Nigeria’s total installed capacity, its power plant utilises gas to power sustainable, reliable and efficient electricity generation operations.

Transcorp Power prioritises operational excellence through regular maintenance and optimisation of its power plants while investing in capacity recovery and technology upgrades to contribute significantly to the national grid, he said.

Transcorp’s plant, which has an installed capacity of nearly 1,000MW, contributes 7.14 per cent to Nigeria’s total installed generation capacity. The company continues to prioritise capacity recovery projects, operational optimisation and regulatory compliance under the Multi-Year Tariff Order (MYTO) regime of the Nigerian Electricity Regulatory Commission (NERC).

Transcorp’s sustained success in Nigeria’s turbulent power sector can be traced to its strategic positioning across key operational and social pillars. At the core is its relatively stable access to gas, an advantage in a market where many gas-powered plants remain idle due to chronic shortages. Being a player in the energy sector, this is understandable for Transcorp Group but may be difficult for other organisations. This reliability in fuel supply has allowed the company to maintain consistent generation levels while others struggle with downtime.

Regular plant upgrades, predictive maintenance, and real-time performance monitoring systems should enable GenCos to maximise output and reduce inefficiencies. They have to combine this with a disciplined financial model, marked by a lean operational structure, efficient procurement practices, and a deliberate reinvestment strategy.

Through initiatives such as the Transcorp Power schools, skills development programmes and bursary awards, the company has embedded itself within its immediate environment, fostering goodwill, stability and long-term social investment that reinforce its licence to operate.

Still, industry observers warn that the sector’s woes could yet affect even the most resilient players unless deeper reforms are undertaken. Experts advocate urgent recapitalisation of the power market, a debt securitisation mechanism for GenCos, improved transparency in metering and billing, and liberalisation of market rules to allow bilateral contracts and competitive tariffs.

Meanwhile, the Transmission Company of Nigeria (TCN), which links GenCos to DisCos through a centralised grid, continues to battle transmission constraints, technical losses, and infrastructure gaps—issues that further weaken the entire energy value chain. Transcorp Power may be proving what is possible with operational efficiency and disciplined management, but the broader power sector remains structurally broken.

GenCos’ strong showing comes against a backdrop of crisis in Nigeria’s power sector. Generations across the national grid have struggled to stay above 4,500MW, a far cry from the over 13,000MW installed capacity nationwide. At the heart of the problem is a N4 trillion liquidity gap, which has left most GenCos and gas suppliers starved of liquidity.

Recently, the Association of Power Generation Companies (APGC) raised the alarm that mounting unpaid invoices, totalling N2 trillion from 2024 operations and N1.9 trillion in legacy debt could force plants offline. The group warned that GenCos was considering a full shutdown unless urgent interventions were made.

APGC Chairman, Sani Bello, specifically noted that power generated by GenCos continues to be consumed in full without corresponding payment, adding that “We are owed N4 trillion with no bankable financing plan in sight. This situation is unsustainable.” The Nigerian Bulk Electricity Trading (NBET) Plc, which buys electricity from GenCos and sells to DisCos under vesting contracts, has been unable to meet its payment obligations due to poor remittance from the DisCos, many of whom cite high levels of energy theft, inadequate metering and low collection rates.