The management of Geregu Power Plc earned a rare commendation from the lawmakers in the Senate, as the lawmakers lauded the efforts of the company for meeting the performance target set by the Bureau of Public Enterprise (BPE).
At the end of the just-concluded three-day investigative hearing on the power sector recovery plan, the lawmakers blamed the hiccups in the power sector to lack of coordination among players responsible for power administration in the country. But the committee submitted that only two of the six privatised GenCos- Geregu Power and Transcorp Power met the performance targets set by BPE.
The Chairman of the committee, Gabriel Suswam, said: “We have listened to presentations from the government side and the operators and we have seen that there is no alignment anywhere and that is the problem. Once there is an alignment and proper coordination, there will be sanity and progress. Out of six GenCos privatised, only two of them are performing.”
The Director-General of Bureau of Public Enterprise (BPE), Alex Okoh, said, “Geregu Power met its minimum performance target set for it in 2013, while the other four GenCos did not meet their targets for various reasons. It achieved 435mw from its 414mw at handover.”
But what has been behind Geregu Power Plc’s success considering the numerous challenges in the sector?
The company attributed its success to its long-term investment plan, reaffirmed belief in the overall objective of the power sector reform programme of the Federal Government.
In an exclusive interview with Nairametrics, the Chief Executive Officer, Geregu Power Plc, Akin Akinfemiwa, attributed the success of the company to a strong focus in certain areas.
Excerpts:
How have you been able to achieve this success despite all the challenges in the power sector?
We appraised the investment as a long term play, reaffirmed our belief in the overall objective of the Power Sector Reform Programme of the Federal Government and we set out our plans accordingly. Our success is therefore
primarily hinged on a strong focus in the following areas:
1. Meeting and exceeding the goals of the privatization exercise to ensure that the private sector is seen to be capable in the operations of the power sector.
2. Motivating our people to ensure that they deliver the afore-mentioned goals and objectives. Our main challenge here was changing the culture of the organisation and people from that of a public service institution to a private enterprise with a service-oriented culture.
3. Prudent management of resources with special emphasis on financial engineering to effectively manage the lingering liquidity squeeze in the sector.
4. Maintaining high levels of operational efficiency with investments in major overhauls and regularly scheduled maintenance programmes, as well as ensuring adequate technology transfer between our service providers and technical employees in the day-to-day management of the power plant.
6. Effective relationship management with all stakeholders along the power value chain.
7. Strong corporate governance practices to ensure transparency, accountability and to promote sound business ethics across the entire organisation. We have a firm conviction in the long-term viability of the power sector in Nigeria and our commitment is unwavering.
Riding on this success, are there plans to expand the existing capacity of Geregu Power Plant?
As you may be aware, we inherited the power plant with an available capacity of 90MW in November 2013, even though the plant’s nameplate capacity was 414MW at the time. In furtherance of our goals and objectives at takeover, we invested the sum of 100 million dollars (USD) to carry out a major overhaul not only to ensure that the three turbines were operational at the nameplate capacity of 414MW but also to add an extra 21MW to bring the total nameplate and available capacity to 435MW. This achievement is one I consider to be a short-term strategy.
In the medium-term, we are in the final stages of completion of the front-end engineering design (FEED) aimed at converting the existing simple cycle infrastructure to a combined cycle plant by installing a steam turbine with a capacity of 300MW to take the current configuration to 735MW. Our medium-term strategy is also focused on expansion through the acquisition of existing power plants in other locations in Nigeria. We are also watching key developments in renewable energy and have the establishment of solar and wind power in our purview, as a company focused on providing sustainable energy to Nigerians.
The world bank just approved a $750m financing capacity for the power sector. How does this help Geregu in achieving its medium to long term goals of 2 above and exceeding privatization goals?
This is a very welcome development and it is very encouraging to see that the Power Sector Recovery Plan (PSRP) is being taken seriously as the World Bank had set conditions for the Federal Government to achieve before approving this initial amount. For Geregu Power Plc, the World Bank financing will eliminate or reduce the liquidity crisis in the sector, which means that all GENCOS including Geregu will get paid in full for power dispatched to the grid and this will give us access to more funding for our expansion plans.
Furthermore, when the entire sum is fully approved, a portion of it will be channelled to the expansion of the national grid to reduce the incidences of stranded power. The funds will also be used in reducing electricity distribution losses. The World Bank financing is without a doubt, a significant step in creating a self-sustainable power sector devoid of the Government’s payment interventions. This will ultimately translate to sustainable power for Nigerians in the near future and foster the much-needed investor confidence in the sector.
Last year the Chairman of Geregu Power Plans, Billionaire investor and businessman, Femi Otedola, revealed plans to shift focus to power generation with a planned investment of up to $1 billion into Geregu Power Plc. The purchase of Geregu was done in 2013 during the power sector privatization, under Amperion Power Distribution Company Limited which is a subsidiary of Forte Oil Plc. After the acquisition, $94 million was initially invested in the power plant. In 2018, another $350 million was pumped into the plant. Otedola said the acquisition/investment is demonstrative of his commitment to the Federal Government’s power sector recovery plan.
The company reportedly generates annual revenue of $41 million.
