The debts owed to Geregu Power Plc and Transcorp Power, the two power companies listed on the Nigerian Exchange Group (NGX), have soared to a record N420 billion in 2024, highlighting severe liquidity challenges in the sector.
Thank you for reading this post, don't forget to subscribe!According to their 2024 financial statements, Transcorp Power’s customers owe N298.4 billion, while Geregu Power is owed N121.8 billion. This marks a sharp increase from the N193.3 billion combined trade receivables recorded in 2023, where Transcorp Power accounted for N145.2 billion.
Despite a significant revenue jump—rising to N443 billion in 2024 from N225 billion in 2023—the cash flow crisis persists. Cash sales made up only 44% (N193.6 billion) of total sales in 2024, compared to 69% (N154.7 billion) in 2023.
While both companies reported profit growth, with a combined net profit of N107.4 billion—Transcorp Power contributing N80 billion and Geregu Power posting N27.4 billion—their declining cash ratios signal growing financial strain. Transcorp Power’s cash ratio fell to 0.036 in 2024 from 0.05 in 2023, raising concerns over its ability to cover short-term liabilities. Geregu Power’s cash ratio also declined, from 0.99 in 2023 to 0.26 in 2024, though it remains in a healthier position due to stronger cash reserves.
Transcorp Power’s liquidity struggles have led to an additional N73.6 billion in debt, pushing its trade payables to N172.4 billion—nearly double the N98.8 billion reported in 2023. Meanwhile, Geregu Power’s debts to suppliers surged to N98.1 billion, with N80.9 billion owed to gas suppliers, a 73% increase from 2023’s N46.7 billion.
The partial removal of electricity subsidies in early 2024 provided a revenue boost for power companies, but liquidity issues remain severe. Distribution companies continue to struggle with cash flow, limiting their ability to procure meters for customers, while mounting debts constrain power generation.
Despite rising revenue and profits, the sector faces persistent financial instability, with unpaid bills and declining liquidity posing serious risks. The ability of Transcorp Power and Geregu Power to manage cash flow and reduce outstanding debts will be critical in determining their financial stability in the years ahead.
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