Explainer: What listed Geregu Power means for Nigeria’s power sector
On Wednesday, Geregu Power Plc officially became the first electricity generating company to be publicly listed on the Nigerian Exchange Limited (NGX).
The company, which was listed at N100 per share and N250 billion in market capitalisation, closed its first day of trading at N110 per share and N275 billion in market capitalisation.
The firm’s listing by introduction on the Nigerian Exchange Limited (NGX) means Geregu Power will be able to raise significant amounts of capital through an initial public offering and subsequent funding rounds to fund general corporate operations, growth opportunities, research and development, marketing, and capital expenditures.
The firm will also gain a higher share of valuation, reduce corporate debt, maintain corporate identity and become better known, among other benefits.
Energy experts say with improved transparency, implementation of critical reforms, clean-up of historical tariff shortfall debt on the electricity distribution companies’ balance sheets, the power sector could soon be back in the spotlight for new investments, raising hope of improved power supply for consumers.
“Democratising ownership of various parts of the electricity value chain is a good way to mitigate the risks posed by the market power that Nigeria’s electricity companies, relatively small as they are, do have,” Eyo Ekpo, chief executive officer of Excredite Consulting Limited, said in a tweet on Thursday.
He said the public listing compels adherence by owners and managers of these assets to standards of accounting, public communication/stakeholder relations, and corporate governance that can only be beneficial.
“The more of us (Nigerians) that put money into these assets the more likely we are to ask the questions and demand – and get – the answers that will eventually lead to solutions that make sense and relieve us of the huge burden of being our own electricity providers for a greater part of each day,” he said.
Temi Popoola, chief executive officer of NGX, said having Geregu Power listed on the stock exchange is proof of NGX’s commitment to building a robust and inclusive market and creating avenues for sustainable investment.
“This listing will enhance liquidity for Geregu, increase its visibility among global investors, elevate its value and boost transparency, as our marketplace is a sterling platform for raising capital and enabling sustainable growth for national development,” Popoola said in a statement.
Ade Yesufu, a market research specialist at Greenville Energy, said the listing of Geregu Power would improve the reliability of electricity supply, attract private capital, and achieve fiscal sustainability that will increase liquidity in the sector.
“Whilst the private sector seeks to attract private capital, the government needs to provide an enabling environment through market-driven policies that will create a more enabling environment for more institutional investors in Nigeria’s power sector,” he added.
Africa’s biggest economy has the capacity to produce 13,000 megawatts of power, compared with more than 50,000MW for South Africa, which has a similar-size economy and a quarter of the population. But Nigeria’s ageing grid delivers less than 5,000MW of power to its 200 million citizens — roughly what the capital city of Scotland provides for 500,000 residents.