In this exclusive interview with Daily Trust, Transcorp Power Non-Executive Director, Risqua Murtala Mohammed speaks about the recent listing of the Transcorp shares on the floor of the Nigerian Exchange, the strategic target of the company and the burden of power subsidy. Excerpts:
Last week we saw the listing of Transcorp Power and by the end of the week, emerged as the best performing stock with the most gains of about 835 billion naira. What did you make of that?
I was quite impressed by the performance of the company in the market even though I wasn’t surprised because it is a very good company. It’s well-run and it is contributing tremendously to the power demand in Nigeria.
What encouraged you to invest in Transcorp Power?
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Well as you know, we’ve always had power deficit issues in Nigeria for the last couple of decades and obviously anybody knows that for the country to progress and make any meaningful development you need to have power, so that you can power the small businesses, the schools and the hospitals.
From the very early stages, I had decided that I wanted to be part of this space and we got together with like minds and then decided to invest and we acquired Transcorp Power plant from the federal government in 2012.
When we bought it, it was performing at 160 megawatts, but today, it is performing at over 700 megawatts, so we’ve spent a lot of time investing, refurbishing and we believe that that is what we need to be able to power this country.
If we can power this country then we’ll be producing. If we’re producing, we’ll be exporting, if we’re exporting, we’ll have a stronger balance of trade situation and we will be less dependent on import and eventually it will have an effect on our foreign exchange.
How has the listing on the Exchange aligned with the long-term goals and objectives of Trans power?
The power business is very capital intensive and we’ve invested quite a significant amount over the last couple of years in trying to not only acquire the plant but to refurbish the plant, and to make sure that it’s a top-performing power plant.
I think we have gotten to a stage where we’ve created a lot of value, and we feel that it is time for Nigerians to key and buy into that value and that’s why we’ve gone to the market for Nigerians to key into that value also gives us, the additional capacity to be able to create more value. That is the reason behind going to the market.
What would be your message to this group of people, who are wondering whether to be a part of this?
I think they should be a part of it, not because I’m part of it, but I think they should be a part of it because Transcorp is a good brand and it is runed properly, they operate best practices, they do things according to the book, and they create value, most of all. So, anybody who wants to be part of that value creation, I think Transcorp is a company they should be part of.
If we can power this country, there’s going to be tremendous development across the board because, as I said earlier, universities, schools, hospitals, businesses, once you have power, you can operate efficiently, and it becomes the least of your problems and then you can focus on creating value and development.
Nigeria is home to over 30 million MSMEs, what impact would you expect for Transco Power to have in the area of trade and commerce?
I think right now, Transcorp Power is producing about 7% of the nation’s consumption and I think we intend to get up to about 25% of the total nation’s consumption and definitely by making power available then you will have more development and more progress.
Companies, businesses will be able to have power at a lesser, much lower cost and it’s readily available than powering generators all the time. It is not cheap, especially if you consider the fact that we import our diesel, which is bought in foreign exchange; which puts much more pressure on the Nigerian currency.
So, at the end of the day, it is going to help to promote more business and more development and more value creation within the system.
What are your thoughts on the removal of subsidies in the power sector?
I think it is a very complicated subject in the sense that there are a lot of factors that you need to take into consideration when discussing that issue and even for those who are in positions of authority who need to take decisions on that issue, they need to consider a lot of things; on one hand, the business owners are saying the tariff needs to be cost reflective. I cannot spend N10 producing something and you want me to sell it at N8. If I’m making a loss of N2 in 10 years or 3 years or two years, I’ll be out of business.
But the government is also saying we cannot increase the price of how much people pay for electricity because people are already struggling to survive with just general expenses that they incur every day, so to now add the added cost of power to that again will complicate matters.
So, it’s a very delicate balancing act. On one hand, the businesses are saying, look we need to be able to recover our funds that we’ve invested. On the other hand, the government is saying you know we’re also trying to meet you but it’s not something that we can just decide on and just take an action on it immediately like that, so it’s a very complicated subject.
What solutions would you suggest to bridge that gap?
Well, there’s no easy fix because you want more people to come in and invest in the sector but at the same time, if the sector isn’t attractive and they’re not able to recoup their expenditure, they’re not going to want to come in.
Then there are the other factors that affect the economy or the environment, you’ve got the security issues, which the government is doing a lot to try and curtail. There are also the economic issues. It’s a multifaceted issue but I think as we’re progressing and as this government is carrying out reforms and trying to do things properly, then investors will have the confidence to be able to come in and invest.
