Afrigather The 2 publicly listed energy corporations, Geregu Energy and Transcorp Energy, incurred N174.2 billion in fuel bills within the 9 months ending September 30, 2024 (9M 2024). This marks a 171 % year-on-year enhance from the N64.2 billion expense incurred throughout the identical interval in 2023.
Transcorp Energy contributed the majority of the expense with a fuel expense of N118.4 billion through the 9 months. It marked a 203 % year-on-year progress type the N39 billion expense incurred within the corresponding interval of 2023. For Geregu Energy, the fuel value throughout 9M 2024 was N55.8 billion, marking a 121 % year-on-year progress from N25.2 billion as of 9M 2023.
The rise in fuel prices for these corporations had a minimal affect on their backside traces, as each energy technology and income grew in tandem. A assessment of each corporations’ gross margins means that the numerous rise in fuel provide and transportation prices is linked to elevated energy manufacturing from each crops through the 9 months.
Geregu Energy’s gross margin in 9M 2024 was 48.6 %, representing a 60 foundation factors year-on-year enhance from 48.2 % as of 9M 2023. Nonetheless, for Transcorp Energy, the scenario is a bit contrasting, as its gross margin for 9M 2024 declined to 43 %, marking a 5 percentage-point decline from the 48 % gross margin recorded within the corresponding interval in 2023.
Learn additionally: Fuel value cuts Transcorp Energy’s working margin by 700 bps
Nigeria at the moment has round 60 energy crops with a complete producing capability of roughly 16,385 MW. About 80 % of this capability comes from gas-powered crops, with Transcorp Energy and Geregu Energy being absolutely depending on fuel. Transcorp Energy Plc operates the Ughelli energy plant, which has a producing capability of 900 MW. Geregu Energy Plc alternatively, operates the Geregu I Energy Plant, which has a producing capability of 414 MW.
Nigeria is a web exporter of pure fuel, the important thing uncooked materials for these energy corporations. Nonetheless, in recent times, the primary provider, NLNG, has confronted challenges with feed fuel provide resulting from frequent pipeline vandalism within the Niger Delta. Within the face of challenges confronted by NLNG, different pure fuel corporations resembling Shell Nigeria Fuel (SNG), Nigerian Fuel Firm, and Heirs Energies have stepped up.
Geregu Energy receives fuel from Nigerian Fuel Firm and Transcorp Energy receives fuel from Heirs Energies.
In keeping with the elevated fuel expense, a assessment of each corporations’ stability sheet present that their debt to their fuel suppliers can also be rising. For Geregu Energy Plc, the commerce payable to fuel suppliers elevated by N29.8 billion to N76.5 billion on the finish of the 9 months, marking a 64 % enhance through the 12 months.
Transcorp Energy’s debt to its fuel suppliers additionally elevated through the 12 months, as the corporate’s commerce payables elevated by N35.9 billion through the 9 months to N103.9 billion, from N68 billion initially of the 12 months.
Learn additionally: Subsidy boosts Geregu Energy’s money circulate by 95%
A assessment of the cashflow statements by each corporations reveals that they’ve elevated spending on their money owed to the fuel suppliers. In 9M 2024, Geregu Energy spent N34.8 billion on its liabilities to its distributors, representing a 516 % year-on-year enhance from the N5.6 billion spent in 9M 2023. Though, there is no such thing as a distinction between the fuel money owed and different money owed, fuel money owed characterize about 84 % of the corporate’s whole commerce payables. Transcorp Energy additionally spent N59.2 billion on its commerce payables through the 9 months underneath assessment, a big enchancment from the N4.9 billion spent through the corresponding interval in 2023.
Money owed owed to fuel suppliers have lengthy been a big problem in Nigeria’s energy sector, with producing corporations’ liabilities to fuel suppliers reaching an estimated $1.3 billion. These excellent money owed have hindered the regular provide of fuel to the nation’s gas-fired energy crops, as fuel processing corporations face liquidity constraints that restrict their potential to make sure constant supply.
Notably, the FG subsidises the value of pure fuel. In March 2024, Ed Ubong, the director, Decade of Fuel Secretariat, famous that the Federal Authorities had paid up about $120 million of this debt.
