Transcorp Power’s liquidity strained as trade receivables surge 65%

Transcorp Power Plc’s trade receivables jumped 65 percent to N395.34 billion as of September 2025, highlighting mounting liquidity pressure at one of Nigeria’s largest electricity generators as payment delays from the bulk buyer, NBET, persist.

The company’s unaudited nine-month financials show total receivables and related balances rising to N432.15 billion from N298.39 billion at the end of last year. Most of this, N418.5 billion, represents unpaid invoices from customers, primarily the Nigerian Bulk Electricity Trading Plc (NBET), which purchases electricity on behalf of distribution companies.

Transcorp Power booked an impairment loss of N7.69 billion during the period, in line with IFRS 9’s expected credit-loss model, bringing total provisions for doubtful debts to N23.16 billion, up from N15.47 billion in 2024.

Under its Power Purchase Agreement with NBET, the company is entitled to interest on overdue invoices, but it has yet to recognise any such income pending government approval.

Nigeria’s power sector is facing a deepening financial crisis that could push government liabilities to N6.2 trillion by the end of this year. With the exit of premium customers like Dangote Group, MTN Nigeria and about 60 percent of manufacturers off the national grid, the government faces about N200 billion tariff shortfall monthly.

“Liquidity is an existential threat to power generation companies. And it’s growing,” said Joy Agaji, managing director/chief executive officer of Association of Power Generation Companies in a televised interview recently.

Agaji argued that the authorities have no clear financing plans to deal with what she described as a “contagion”. According to her, GenCos invoice NBET an average of N280 billion, not for power that is generated by the Gencos, but rather what the system, given all its constraints, can accommodate.

“From 2013 to the present, power generation has increased, but utilisation has stagnated at around 3,500 to 4,000 megawatts, of which only 35% of the power generated is paid for.”

Latest data from the Nigerian Electricity Regulatory Commission showed that the federal government owes GenCos N1.05 trillion for the first six months of 2025. This is after authorities reportedly approved the payment of N4 trillion legacy debt that’s held down power generating companies liquidity.

Transcorp Power disclosed that accrued but unbooked interest on unpaid bills amounted to N126 billion as of September, compared with N72.2 billion a year earlier. “The reconciliation is still ongoing and no firm commitment has been received,” the company said.

The swelling receivables underscore a chronic liquidity imbalance in Nigeria’s power sector, where generation companies (GenCos) face cash shortfalls as NBET’s remittances remain inconsistent. The delay limits reinvestment and heightens borrowing dependence even as demand for power rises and cost of borrowing balloons.

Current assets climbed to N443 billion, representing more than 82 percent of Transcorp Power’s total assets, while cash and cash equivalents slipped to N7.64 billion from N8.34 billion. Current liabilities surged to N338 billion from N230 billion, driven by higher trade and tax payables.

Despite the funding strain, Transcorp Power reported profit after tax of N68.42 billion, a 17 percent increase from N58.42 billion in the same period of 2024. Revenue rose 38 percent year-on-year to N308.54 billion, buoyed by higher generation output and energy deliveries.

The Ughelli-based generator, a subsidiary of Transnational Corporation Plc, operates over 900 megawatts of installed capacity and was listed on the Nigerian Exchange in early 2024 following its conversion to a public limited company.

As the government pushes for cost-reflective tariffs and improved market liquidity, analysts say sustained payment discipline by NBET will be crucial to easing cash-flow pressures for power producers and stabilising investor confidence in the sector.

Shares of Transcorp Power surged 8.9 percent on Monday to N342 after its modest earnings performance spurred investors’ interest in its stocks. But in terms of year-to-date performance, the stock has lost 4.97 percent as liquidity strains put investors on the sidelines.

“Shareholders’ fears may be allayed by the 9 percent increase of TRANSPOWER share price since September 12th, which is 25th best on NGX,” according to data analytics platform, African Stock Exchange.