…as output set to hit 1,000MW in 3-years
The year 2023 is set to be the first in a multi-year growth surge for Geregu Power Plc, based on its expansion and investment plans.
“We are positive that our expansion plans will lead to exponential growth for many years to come, starting from 2023,” said Akin Akinfemiwa, CEO, Geregu Power Plc in an interview on AriseTV.
In the short to medium term, Geregu Power plans to take advantage of the immediate Nigerian environment by using fossil fuels for thermal generation of electricity.
The company which bought an underperforming State owned power asset in the privatization exercise of 2013, with effective capacity of less than 100 megawatts (MW) has ramped up its capacity to 435 MW, with 70% – 80% of power generated being fed to the grid.
In a sign of the solid corporate governance present on the board of Directors of Geregu, and also a vote of confidence on the future growth of the firm and Nigeria’s power sector, the Fund for Export Development in Africa (FEDA) has taken a 5% stake in Geregu Power in a deal that was completed yesterday on the Nigeria Exchange Group (NGX).
FEDA is the impact development arm of the Africa Export and Import Bank (Afreximbank).
The deal is valued at around N28 billion based on Geregus Power closing share price of N224/share on the NGX.
As part of its growth plans, Geregu Power Plc is bidding to acquire one of the National Integrated Power Plants (NIPPs) being put up for sale by the Federal Government through the Bureau of Public Enterprises (BPE).
In July 2022, the company issued N40.085 billion unsecured corporate bond for a 7-year tenor and at a coupon and effective interest rate of 14.5% and 14.70% respectively.
“The net proceeds would be used to finance the acquisition of a similar power plant in Nigeria which is currently in the final stage of bidding processes by the Bureau of Public Enterprises (BPE),” Geregu Power said in its 2022 Full Year financials.
The power plant Geregu is seeking to acquire is Geregu 3, a 440 MW plant close to its current operations.
“With the acquisition, we will run a combined cycle operation to ramp up capacity to 1,000 MW in 2 – 3 years,” Akinfemiwa, CEO, Geregu Power Plc, said.
Geregu plans to also take ownership of its feedstock (gas), so as to have a vertically integrated power production business, according to Akinfemiwa.
The power firm reported a 33% decline in revenues in 2022.
The decline in revenue was largely due to gas supply constraints as a result of a nationwide force majeure (FM) declared by Shell Petroleum Development Company Limited on the Trans-Forcados pipeline and its consequent effects on the Forcados oil terminal, gas supplies to the power plant by Its primary gas supplier, which ceased from 17th of July 2022.
The maintenance works on the pipelines were however completed at the end of November 2022 and gas supplies and normal operations have since then resumed.
Akinfemiwa, who noted that 2022 was a difficult year for most thermal generating firms operating in Nigeria, said things are now back to normal, with the firm positioned for growth.
“We have carried out the 2nd major overhaul of our plants since privatization, to increase capacity. We have also created employment and generated taxes for the government,” Akinfemiwa said.