The introduction of bilateral contracts, supported by the supplementary Multi Year Tariff Order (MYTO), offers significant growth potential for power generating companies like Transcorp Power and Geregu.
“These reforms are expected to support revenue stability, improve cash flow management, strengthen cost recovery, and incentivize capacity expansion,” according to a report on the sector by Cardinal Stone Partners analysts.
In July 2024, the Nigerian Electricity Regulatory Commission (NERC) issued the “Order on the Transition to Bilateral Trading in the Nigerian Electricity Supply Industry (NESI),” marking a shift from a centralized bulk trading system to a competitive bilateral market.
This reform is designed to enhance market competition by reducing the role of the Nigerian Bulk Electricity Trading (NBET) Plc as the intermediary and allowing GenCos to engage directly with DisCos.
A key feature of this transition is the adoption of “take-or-pay” contracts, which guarantee payments for off-take obligations, fostering market certainty and discipline. This mechanism allows DisCos to optimize energy procurement and enhance supply quality.
This strategic reform aims to foster a more competitive and efficient electricity market in Nigeria, reduce the government’s fiscal exposure to market risks, and encourage direct contractual relationships between electricity producers and distributors.
The move would also address the industry’s persistent liquidity challenges, which resulted in GenCos receiving less than 40.0% of their FY’24 power supply invoices. This is reflected in the N267.0 billion combined receivables of TRANSPOWER and GEREGU (+87.2% YoY), which strained their cash flows.
Notwithstanding the liquidity crisis, the average available capacity rose by 12.3% from December 2023 to Q3’24.
“The traction on available capacity would have been better if the liquidity issues had been resolved and fresh investments had been made in the sector,” Cardinal Stone Partners said.
Transcorp Power reported a 115% increase in revenue to N305.9 billion in 2024.
Profit after tax surged by 165% to N80 billion in Full Year (FY) 2024, from N30.2 billion in FY 2023.
Since Transcorp’s sales has begun exploding higher in its fiscal year that ended in December 2024, revenue has exceeded the midpoint of the company’s own 2031 revenue forecast by an average of 22.3%.
Transcorp Power announced a final dividend of N3.50, summing up to a total dividend of N5.00 per share for the 2024 financial year, implying a robust payout ratio of 46.9%.
Geregu Power a Nigerian energy firm that generates and sells electricity has increased its dividend after 71% profit growth achieved in the year ended 31, December 2024.
The utility firm reported profit for the year that surged to N27.425 billion from N16.05 billion in 2023, and raised its annual dividend by 6.25% to N8.50 a share, a sign that accelerating growth is paying off for investors.
The money will be distributed to shareholders on the register as at the close of business on 14 March 2025. The total divided to be paid to shareholders is N21.25 billion.
Revenue for the Full Year 2024 period rose sharply by 66% to N137.12 billion as both energy sold and capacity charge revenue items increased.
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