The nine-month unaudited financial statement for 2024 (9M 2024) shows that Geregu Power recorded a cash inflow of N50.1 billion from its operating activities, reflecting a 95 percent year-on-year growth, from N25.6 billion recorded in the corresponding period in 2023.
The growth in the company’s operating cash flow highlights the impact of the electricity subsidy removal on players in the industry.
According to the financial statement, the company spent about N34.8 billion on paying some of the obligations to its gas suppliers, contrasted with the N5.6 billion spent in the corresponding period of 2023.
Despite a 19 percent drop in net cash from operating activities and an 18 percent decline in overall net cash, it appears the company has been actively pursuing growth opportunities. In 9M 2024, the company spent about N32.7 billion acquiring fixed assets, including N18.3 billion on a new gas turbine plant.
While the company is generating more cash from its operations than ever before, it is struggling with unpaid power debts. The company’s net trade receivables have risen sharply from N43.7 billion at the beginning of the year to N105.6 billion by September 30, 2024. Initially, trade receivables were N122.6 billion, but after setting aside N17 billion for expected credit losses, the amount reduced to N105.6 billion.
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Away from its cash flow, Geregu Power recorded a profit after tax of N24.2 billion for 9M 2024, representing a 113 percent year-on-year growth from the N11.4 billion recorded in 9M 2023. The company’s net income was driven by a revenue of N112.6 billion, which was more than double the N55.7 billion revenue generated in 9M 2023.
The company’s cost of sales also hit N57.9 billion during the period, marking a significant 116 percent year-on-year appreciation from the N26.9 billion posted in 9M 2023. Growth in the cost of sales was attributable to a 121 percent increase in the company’s gas supply expenses which hit N55.8 billion during the nine-month period.
Natural gas is the major raw material of a power generating companies such as Geregu Power Plc. However, one of the major challenges in the Nigerian power supply chain has been the debt owed to gas suppliers by power producers. For Geregu Power, the company’s debt to its gas suppliers hit N76.5 billion at the end of September 30, 2024, from N46.7 billion owed at the start of the year. However, the company has been able to pay a substantial portion of its debt to those gas suppliers.
On April 3, the government announced the removal of electricity subsidies for customers who were enjoying at least 20 hours of power supply daily. This has resulted in a significant appreciation in cash flow as well as profit generation for players in the Nigerian Electricity Supply Industry (NESI).
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