Christopher Ezeafulukwe is the MD/CEO of Transcorp Power Limited (“Transcorp Power”), a leading power generation company (GenCo) in Nigeria and a subsidiary of Transnational Corporation of Nigeria plc (Transcorp). An alumnus of Lagos Business School, IESE Business School, Spain, University of Lagos and the Nigerian Law School, Ezeafulukwe is a member of the Association of International Petroleum Negotiators, the Nigerian Bar Association and the Institute of Chartered Secretaries & Administrators of Nigeria, amongst others, and has served as a member of the Executive Committee of the Association of Power Generation Companies. In this interview with DIPO OLADEHINDE, he highlights the challenges facing Nigeria’s power sector and Transcorp Power Limited’s plans. Excerpt:
You have spent about three months as the new MD/CEO of Transcorp Power Limited. How do you find your new role and what kind of challenges have you faced?
Leading one of the largest power generation companies in Nigeria, Transcorp Power, which is also a significant member of the Transcorp Group, comes with huge responsibilities, given the wide spectrum of stakeholders whose interests must be taken into consideration in every decision you make and every action you take as the MD/CEO.
Prior to my appointment as the MD/CEO, I supported Transcorp Power from the Group as the executive director, Business Development and Legal. I was equally a non-executive director of Transcorp Power. Both roles prepared me for my current position, as I have always been an integral part of Transcorp Power’s business. So, fitting into the new role was not a challenge. It was a kind of widening the scope of leadership responsibility one had.
Having said that, I must also admit that as the MD/CEO, I no longer play only supporting roles to the power business of Transcorp, rather the buck now stops on my desk, and I have the overall responsibility of ensuring excellent execution of the business strategies formulated by our Board. What this means is that I have become a bit more of everything, which is the first thing every CEO who wants to succeed must do: I have become a bit more of a mechanical, electrical, instrumentation and control engineer, operations, health and safety, financial, human resources, administration, relationship management and legal executive. With these, I have a deeper understanding of the power generation business and the electricity markets both local and international. It has been an interesting experience.
Regarding the challenges, my team and I have had to deal with issues of gas pipeline vandalism, which impacts our power generation, given that gas is our feedstock as a gas-fired power generation plant. We are also dealing with the issue of inadequate gas supply in terms of volume. and at times, quality of gas. The good news, however, is that working with key stakeholders, including our gas suppliers and transporter, we have reasonably addressed the challenge of gas pipeline vandalism, and have made significant progress in addressing gas volume and quality issues. The result is the increased generation which we have continued to experience from the end of first quarter of 2020.
Liquidity is a major challenge arising from the significant debt owed Transcorp Power for electricity which we have consistently generated at our cost and put on the national grid, and which has been consumed by Nigerians and Nigerian residents. We are engaging government, key operators and stakeholders in the power sector towards addressing the liquidity challenge. I must also acknowledge the recent improvement in payment by NBET and state that if the trend is sustained, and the older debts paid, Transcorp Power will be in a better position to make even more significant contributions towards addressing the power needs of Nigeria. And we are eager to do just that.
Finally, I had the ‘luck’ of taking over the leadership of Transcorp Power at the point the coronavirus outbreak happened in Nigeria. COVID-19 came with its own challenges, given the unprecedented impact it had on the Nigerian economy. Fortunately for us in Transcorp Power, we had proactively put in place a Contingency Plan under our Business Continuity Strategy. The Plan ensured that we carried all our key stakeholders along, letting them know how we intended to remain operational during the lockdown period, and more importantly, notifying them of the level support we would be needing from them during the lockdown period. This paid off very well. We also implemented a residency programme for our key operations and support team members, which ensured that they remained safe and healthy during the lockdown. This in turn ensured their availability on-site for the continued operation of our plant, given that power generation is an essential service. As at date, we have updated and adjusted our Contingency Plan to meet the health, safety, security and environmental requirements of the workplace in the post-lockdown era. This has ensured the safety of our team members as well as optimal productivity against all odds.
Recently, the Senate president called for a review of the power sector privatisation as Nigerians are yet to fully see the benefits of the exercise. What’s your take?
There is no gainsaying that the Nigerian power sector is very challenged, and those challenges need to be dealt with urgently in order to truly unleash the potentials of the sector. Remember that we are all electricity consumers, so we all are dealing with our respective share of the impact of the current state of things in the power sector. Against this background, I try to understand the frustration which might have informed the comments credited to the Senate president. However, my perspective is that we should not use one brush to paint the entire privatisation exercise. The records are there to show how GenCos have increased their available capacity from 2013 when the assets were privatised to date. The real question to be addressed is why it is that only about 50 percent of the available capacity of GenCos gets to Nigerians. It has been said times without number that if 80-90 percent of the current available capacity of GenCos can effectively be transmitted and distributed to Nigerians, there would be significant improvement in the lives of Nigerians, and by extension, in the economy. This, in my view, explains why the focus of the first two phases of the Siemens deal is on achieving the transmission and distribution of existing generation capacities in the sector. To meet Nigeria’s power needs, our available capacity (as GenCos) must be translated into electricity that meets customers’ needs. It is only when the stranded capacities in the sectors are sustainably utilised that the GenCos (including Transcorp Power) and their investors would have economic justification to venture into additional capacity expansion. These real issues need to be addressed in a sustainable manner.
Transcorp Power is still owed over $150 million by the government. How has the debt impacted your operations?
Typically, as a GenCo, Transcorp Power has its own obligations, which it must meet to remain operational and in business, and to meet its own strategic objective of being responsible for the generation of at least 25 percent of Nigeria’s power needs. The significant amount owed us has effectively restrained us from meeting our payment obligations to our (a) gas suppliers; (b) operations & maintenance contractors; and (c) lenders and bankers. It has also impacted our planned capacity expansion negatively. We have managed to continue operations under the excruciating burden of the inevitable losses arising from these curtailments. This is so because our investors are patriotic Nigerians who have continued to demonstrate ability, willingness and readiness to partner with government and key stakeholders to fix the power sector, knowing how critical it is to the Nigerian economy. It is, however, imperative that government expedites action to pay the debts owed us, and work with key stakeholders to put a sustainable payment system in place, as we find it increasingly difficult to continue operating under these conditions, given their dire consequences for power generation in Nigeria.
What is the current status of your acquisition of Afam Electricity Generation Company (Afam Power plc and Afam Three Fast Power Limited)?
The acquisition of 100 percent stake in Afam Power plc and Afam Three Fast Power Limited by the Transcorp Consortium (of which we are a member) has reached an advanced stage, and is expected to be completed soon. The Afam assets remain a strategic fit for us, given our earlier stated strategic objective of generating at least 25 percent of Nigeria’s power generation need. We look forward to the completion of the transaction.
Finally, beyond the executive management changes at the subsidiary level, which led to your appointment, there was equally a change of your president/CEO at your corporate centre. What vision does the new leadership team have for Transcorp in the short and medium term?
Indeed, a new generation of leaders took charge of the affairs of the Transcorp Group and subsidiary businesses towards the end of the first quarter of 2020. This leadership team is led by Owen Omogiafo, president/Group CEO of Transcorp plc. The synergy has been amazing in the last three months, notwithstanding the peculiar challenges foisted on our operating environment by COVID-19 pandemic.
As a Group, we recently unveiled our five–year strategic business goals which include the expansion of the investment portfolio of the Transcorp Group through strategic acquisitions; deepening the market share of the existing businesses, and diversifying into the manufacturing sector, to help realise our vision of improving lives and transforming Nigeria’s economy.
Deepening the market share of our existing power business will be achieved through organic and inorganic growth. Thus, we intend to, amongst other things, optimise our current available capacity, increase same, complete the acquisition of the Afam GenCo, diversify our energy mix by venturing into renewables and explore other investment opportunities in the power value chain. We are long–term players in the power business.
