*Records 58% growth in Group revenue for H12018
*To kick-start its oil and gas business in 2019
*To position its hospitality business as number one on the continent
Transcorp Power, a subsidiary of Transnational Corporation of Nigeria (Transcorp), says it is targeting 800MW available capacity and generated power of 600-650MW in the near term and a medium term capacity target of 2500MW, which would make it contribute about 25 percent of the country’s grid power by 2027 Kalyana Sundaram, managing director and chief executive officer of Transcorp Power disclosed this at the H1 2018 earnings presentation to analysts in Lagos last week.
He said the assumptions behind the target are improvements in erstwhile militating factors of liquidity, gas supply, foreign exchange and transmission, adding that the 972MW gas fired power plant currently has available capacity of 677.8MW.
Sundaram stated that the target would be achieved by completing IPP expansion projects in the South-South and South-East and that by 2027 it would have acquired interest in a brownfield or green field power plant in Africa, which would see it transform lives on the continent as it aspires to be the No. 1 in power in Nigeria and across Africa
In its medium term outlook, the company will in 2022 commence investment in greenfield power plant in Nigeria, develop new IPP expansion projects in the South-South and South-East captive areas in its vicinity, and make opportunistic acquisition of sub-par power plant in Nigeria.
In his presentation, Adim Jibunoh, president and chief executive officer of Transcorp Group, said the Central Bank of Nigeria (CBN) policy initiatives such as the I&E window has helped liquidity of FX and improved access to FX for debt service and rehabilitation of turbines, and that no substantial FX loss is anticipated by year-end based on the current CBN policy direction.
He said improved gas supply, driven by tactical engagement of suppliers, infrastructural improvements by suppliers and improved payments to suppliers via PAP, led to generation increase, noting that capacity utilisation grew to 81 percent in Q2 2018 (Q2 2017: 53%) while average generation grew to 531MW (Q2 2017: 311MW.
On the group’s financial in the half year ended June 30, 2018, Jibunoh said the strong showing for the period with a gross profit of N54.09 billion and profit before tax of N11.94 billion was largely attributed to higher occupancy due to more completed floors and increased power generation.
“We were able to sustain our growth momentum as seen in our financial result, this was made possible by marginal increase in occupancy rates in our hospitality business, as well as increase in power generation from our power business due to improved gas supply and increased generation capacity,”
He noted that 80 percent of the company’s revenue came from the power business, and that with the coming on of its oil and gas business and the completion of Hilton Hotel Ikoyi and Transcorp Hotel Port Harcourt the revenue mix would change drastically to maintain some equilibrium.
He said the hospitality business has been resilient, and that with the upgrades and envisaged completion of target hotels, it would contribute more to the revenue stream.
On the oil and gas business, he disclosed that partnership engagement with identified new technical partner is at advanced stage to start drill- ing on its oil prospecting lease (OPL 281), which he said would start producing by 2019. He also stated that by 2022, the asset would produce a minimum of 4,000bpd.
Responding to questions, Christopher Ezeafulukwe, executive director, energy services noted that their entry into the oil and gas sector is after much due diligence and business considerations, adding that the assumptions on the future of fossil energy are often exaggerated. He said demand for fossils would continue in the next 20 to 30 years.
Frontpage August 14, 2019