Recent achievements have highlighted the catalytic roles of private investments in Nigeria's quest for adequate and sustained power. Deputy Group Business Editor, Taofik Salako, examines how Transnational Corporation of Nigeria (Transcorp) Plc maintains a balance between investors' returns and public good
From a moribund government power assets few years ago, Transnational Corporation of Nigeria (Transcorp) Plc has carved out a new national power base that contributes some one-fifth of the electricity on Nigeria's national grid. Transcorp Power, the power subsidiary of Transcorp, made history earlier this month as the first privatised power generation company to be discharged from post- privatisation monitoring since the power sector privatisation commenced in 2013.
Experts said the success of Transcorp's investments in power business underscored two important competitive advantages of a private company, especially a publicly quoted company- efficient capital and corporate governance. Experts said the recent trajectory in private investments in power businesses and their growing contributions to Nigeria's energy mix points to a paradigm shift in sustainable solution to Nigeria's power and energy crises.
Managing Director, Globalview Capital Limited, Mr. Aruna Kebira, said the provision of power to the populace that hitherto happened to be a preserve of the government is gradually changing because of the poor performance of government-managed power business and the huge demand for power.
President open letter
Kebira, an investment banker and leading stockbroker, said performance-based assessment and compliance that are hallmark of private sector management and access to funding make private-driven solutions the most feasible options for Nigeria's power sector revitalization.
'The provision of power in today's economy is very paramount. Therefore, the participation of the private sector in that regard will go a long way to correct the extant anomalies. Power is essentially the lubricant of the wheels of the economy, and adequate provision of it would have a positive multiplier effect on all and sundry.
'The private can have access to funding when it comes to projects like this. As far as the lending house is sure of the feasibility of the project and its cash flows, the funding won't pose any threat,' Kebira said.
He called on the government to provide enabling environment for private sector participation in national power business, noting that part of the enabling environment private power companies may thrive on is the resuscitation of the power grids and having off-takers for generated power as electricity cannot be stored.
According to him, the recent amendment to the power sector laws, which removed power from the exclusive to the concurrent list, may give the desire leverage to the sector as companies and governments can explore varied innovative funding and partnership options to solve their power needs.
Founder and Chief Executive Officer, MoneyCounsellors.com, Mr. Michael Oyebola, said private investments are already reshaping the power story.
'NEPA/PHCN was unbundled and privatised 2013 and we now have transmission (TCN), generation (GenCos) and distribution (DisCos) separate. The government now only controls transmission via Transmission Company of Nigeria (TCN) which operates and maintains the infrastructure. As such with the GenCos and DisCos in private hands, they can tap private investors, the stock market and institutional funds among others,' Oyebola, an investment banker said.
From ashes to fire
When Transcorp- a publicly quoted conglomerate with major strategic investments in the hospitality, power and gas sectors, invested in the Ughelli Power Plant in 2013, the plant had a generation capacity of 160 megawatts (MW) from its total installed capacity of 972 MW. Within four years, Transcorp took the generation capacity from 160 MW to 680 MW, beating both the duration and quantity set by the government. The federal government had set a target of 670 MW within five years for the new private investor. Transcorp has also replicated the same feat in another plant.
Transcorp, through its Transafam Power Limited, took over operational management of Afam Power Plant, Rivers State, two years ago. When Transcorp took over the Afam Power Plant operations on the in March 2021, it was generating just 48 MW out of 966 MW installed capacity. In two months, production increased to 120 MW. Transafam Power rehabilitated the 138 MW rated Afam 5 GT 20 Gas Turbine power-generating unit which had been out of service for over 15 years prior to its takeover. The rehabilitation, which has been successfully synchronized to the national grid, brings an additional 138MW to the national grid, able to power up to 100,000 homes in a year. The rehabilitation was achieved using 80 per cent combination of in-house resources and other local technical support and about 20 per cent foreign expert support. Transafam Power has achieved 720 days of no loss time to injury since the operational takeover in March 2021.
Now, Transcorp Power currently has the capacity to produce some 2000 MW of electricity including 966 MW from Afam, Rivers State and 972 MW from Ughelli, Delta State.
The past one and a half years have seen accelerated development in Transcorp's power business. Transcorp Power increased its available capacity from an average of 539 MW in January 2022 to an average of 749 MW by September 2022. By October 2022, Transmission Company of Nigeria (TCN) announced that it has successfully installed and energized a new 150 MVA 330/132/33kV Interbus Transformer (IBTR) at Delta IV Transmission Substation, Ughelli, Delta State. As a result of the installation, which has allowed TCN to evacuate power from Transcorp Power at both 330kV and 132 kV voltage levels, there has been an increase in bulk power transmitted through the substation and better grid stability for consumers in Ughelli, Warri, and its surrounding areas.
In November 2022, Transcorp Power signed the ECOWAS Regional Electricity Market (EREM) Participation Agreement at the 17th General Assembly of the West African Power Pool. Through this agreement, Transcorp Power has become a market participant in the EREM, which is expected to be fully integrated in 2023. Transcorp Power now exports power to Benin Republic.
In March 2023, in realisation of its growing importance, Transcorp Power plant in Ughelli, Delta State was one of establishments selected by the Army War College Nigeria (AWN) on their Environmental Study Tour. The purpose of the visit was to learn about how certain national establishments help with the nation's defence goals. The theme of the study tour was 'Protection of Critical National Assets and Infrastructure for National Defence.' It involved briefings on the workings of the power plant, contributions to socio-economic development and national defence objectives, efforts of the nation and its security apparatus towards the protection of the plant, and how challenges were overcome.
With combined installed capacity of 1,938 MW and 15.5 per cent of the total installed capacity in Nigeria, Transcorp Power's transformative impact has not gone unnoticed by well-rated private assessors. Transcorp won the International Standards Excellence Awards for Best World Class Energy/Power Brand 2021 for its contributions to Nigeria's power sector through Transcorp Power and Transafam Power Limited. Transcorp Power was also the first power generating company to be awarded 3 ISO Certification for Quality, Environment, and Occupational Safety Certifications.
The certification of Transcorp Power as the first power generation company to fulfil all privatisation obligations by the government was climax for the successes over the past few years. With the post-privatisation discharge certificate by/ the federal government, Transcorp Power will no longer be subjected to post-privatisation monitoring, the first for any privatized power generation company. The discharge certificate was presented at the meeting of the National Council of Privatisation (NCP) by Vice President and Chairman of NCP, Professor Yemi Osinbajo to Mr. Tony Elumelu, Group Chairman, Transcorp Plc.
Private success and community wellbeing
Beyond its contribution to the national grid and the regional power supply, the success of Transcorp Power has also impacted positively on the hosting communities, extending the gains of the privatisation. Transcorp Power has created a Vocational Skills Training and Entrepreneur Empowerment Programme at Ughelli, Delta State, to empower women and the youth with entrepreneurial skills and improve the quality of life in the community. During the programme, trainees receive a monthly stipend and upon graduation, trainees receive working tools and a capital grant to kick start and support their journey to starting and growing their own businesses. More than 130 indigenes of the community have successfully completed the skills training programme so far.
Also, Transcorp Power adopted the staff nursery, and primary schools at the power plant, which currently serves the community as well as its employees, guaranteeing a higher quality of education for the children within the community. In the 2019 West African Examination for secondary schools one of the students from the staff school finishing as the best performing student in Delta state.
Transafam Environmental Transformation Initiative is a way of promoting a clean and healthy environment, good health, and education on proper waste management and disposal. The staff of the company along with members of the community will join in a sanitation day exercise to help sensitize and clean the immediate environment, the Okoloma Afam community. Also, Transafam Power periodically fills in the road to make it more accessible for the residents within the community. The Transafam Power Community liaison officer together with paid community labourers, dig up the potholes and fill in the roads with broken blocks.
'Transcorp Power has been able to ensure compliance and surpassed expectations with all post privatisation deliverables. I commend Tony Elumelu and his Transcorp team for this feat. I urge Transcorp Group to continue in that path and even do better,' Vice President Osinbajo said.
According to Osinbajo, a major weakness of Nigeria's privatisation process has been inadequacy of private investments and new cash injections.
'But the tide is turning with indigenous power and private investors such as Transcorp Power and Heirs Holdings, making significant investments such as the 100 per cent acquisition of the 966 MW installed capacity in Afam Plc and Afam III fast power Limited jointly referred to as Afam Genco,' Osinbajo said.
Minister of Power, Engr. Abubakar Aliyu applauded Transcorp Group for its positive contributions to improving electricity generation in Nigeria.
'What we are celebrating today is an exemplar of the best of Public-Private partnerships. This collaboration has ensured that we are commissioning Afam Three Fast Power today, with a capacity to inject an additional 240MW of electricity into the National grid.
'At full capacity, it will no doubt provide about 40 per cent of our generated energy today. This is commendable and will certainly improve electricity supply to the nation along with growth of our economy and Gross Domestic Product (GDP),' Abubakar said at the commissioning of Transafam Power's 240 MW Afam Three Fast Power plant in Afam, Rivers State. With an already existing power plant residing in Afam, the addition brought the cumulative generating capacity of the plant to 1,000 MW.
Director General, Bureau of Public Enterprises (BPE), Alex Okoh described the turning around of the power plants as milestones, noting that Transcorp met and exceeded the performance targets and all other covenanted obligations agreed during the signing of the privatization agreement in 2013.
'Transcorp Power increased the generation capacity of the plant by 227 per cent from the operational status as at handover in 2013. Capital expenditure totaling N58.612 billion was covenanted for phase1, phase 2 as 'additional investment' but the actual investment made by Transcorp was the sum of N83.85 billion, leading up to a score of 143 per cent,' Okoh said.
Elumelu said Transcorp, with its investments, is focused on not only generating returns for investors but to impact lives.
According to him, in addition to fulfilling the post privatisation performance criteria, Transcorp has driven a strong indigenous agenda - with plants being managed and fully operated by Nigerians, creating jobs and reducing unemployment in the country.
'Safety is very important to us as well, since we began operations in 2013, we have recorded zero incident till date. At Transcorp Group, we do well and do good. We have grown together with our host communities, enriching lives, and improving the community,' Elumelu, who also chairs the United Bank for Africa (UBA) Group said.
He outlined that as one of the largest conglomerates with some 300,000 shareholders, Transcorp's investments in power, hospitality, and oil and gas sectors are people-centric, aimed at empowering Nigerians and Africans. Transcorp Group includes Transcorp Hilton Abuja, Transcorp Hotels Calabar, Transcorp Power, Transafam Power, and Transcorp Energy.
'We all know the importance of power in Nigeria. We all experience the consequences of our power deficit - the implications for our people, our businesses, our schools, hospitals, and institutions - our national destiny. Transcorp Group is a key player in the power sector. We recognise power is the single most critical factor to lifting our people out of poverty and enabling job creation.
'We will not rest until we know every Nigerian has access to the power and the fruits of that power, which we know can transform our country. We are fulfilling our promises to the government and demonstrating Transcorp's purpose of 'Improving Lives and Transforming Africa,' Elumelu said.
Group President and Chief Executive Officer, Transnational Corporation of Nigeria (Transcorp) Plc, Owen Omogiafo, said the group remains focused on optimizing its assets to improve returns to shareholders and all stakeholders.
According to her, the group is committed to the exploration of its OPL 281 to realize its integrated gas-to-power strategy, redefine hospitality standards in Nigeria and beyond, and increase its daily average available and generated capacity in Nigeria's power sector.
She noted that Transcorp is also launching a world class event center in Abuja to consolidate its hospitality business, even as it continues its expansion to major cities, including Lagos, where it is developing a 300-key 5-star hotel.
She highlighted the improvement in financial performance of the group pointing out that the group recorded N32.4 billion gross earnings in the first quarter 2023 as against N31 billion in corresponding period of 2022, despite facing economic and gas challenges, that affected the power business generation capacity.
Omogiafo highlighted Transcorp's ESG initiatives and progress in reducing its carbon footprint, supporting local communities, and promoting diversity, equity, and inclusion while assuring stakeholders of continuing growth
'Transcorp is about sustainability. We will continue to execute our sustainability strategy of transforming our world to create positive environmental, social, and economic impact across our businesses and communities.
'We are optimistic, and we remain focused on our strategic objectives of fully optimizing our existing assets to ensure we consistently and sustainably deliver value for our stakeholders,' Omogiafo said.