Photo Caption: Transcorp Plc Board members
The management of conglomerate- Transnational Corporation of Nigeria Plc, on Tuesday in Lagos assured that its recent earnings are no mere happenstance, and that top and bottom-line growth would be sustained even beyond year-end for the benefit of shareholders and other stakeholders.
As part of sustaining the growth trajectory, the group said it already strengthening existing honey-pots: the hospitality and power businesses, which are already receiving more investments, while working at ensuring that its oil and gas asset comes on stream to diversify the group further.
President and chief executive of Transcorp Plc, Adim Jibunoh, who led top management of the group to an investors’ conference, spoke of plans to raise the capacity utilization of Transcorp Power, operators of the Ughelli Power Generation Company, Delta State, ultimately to 2,500 mega watts.
The power plant, he said, currently has 81% capacity utilization, to about 800mw of power, from between 550 – 600mw at the moment.
The diversification, according to Mutiu Bakare, the Group Chief Finance Officer, is necessary given that Transcorp Power alone contributes 80% of the group’s top and bottom-line.
The strength of the power asset, Jibunoh also added, has been helped by the availability of gas and payments made to stakeholders in the sector by the Federal Government, which has enhanced the needed liquidity.
On Transcorp Hotels Plc, Jibunoh spoke of the recent investment of about $100m to upgrade facilities, following which room occupancy rate jumped from 63% to between 70 and 80%.
The hotel’s flagship Transcorp Hilton, Abuja, he continued, would benefit greatly from the activities ahead of the 2019 general elections, resulting in better numbers following the upgrade.
The board of Transcorp, he continued, recently appointed two Executive Directors- Christopher Ezeafulukwe and Mrs. Owen Omogiafor, with the former saddled with the task of commercialising the group’s oil and gas asset- Oil Prospecting Licence (OPL) 281, which became part of the Transcorp early in 2012.
Pre-exploratory activities on the licence, the President said, would begin before end of current quarter (Q3), while drilling of oil from the asset which will transform into an Oil Mining Licence (OML) in 2019Q1.
All of these, he stressed, “will translate into the (group’s) bottom-line.”
He spoke of plans by the group to someday expand the hospitality business by going into two, three and four-star hotels across the control and then dovetail into infrastructure development in such areas of railway, before expanding beyond the shores of Nigeria into Africa as contained in its blueprint.
More specifically, Valentine Ozigbo, CEO of Transcorp Hotels spoke of plans to develop the Transcorp Hotel Ikoyi and Port Harcourt by 2027, when the group will also go into low and mid-market segments across the continent.
Still on the Ughelli Plant, CEO of Transcorp Power, Kalyana Sundaram told the analysts conference of plans to extend the capacity from 972mw to 1,700mw, as well as acquire other plants in the medium-term to achieve the long-term target of 2,500mw. By 2027 also, the group hopes to generate 30% of Nigeria’s power needs, which began with just between 8 and 15% to the present 17%.
“We are putting efforts to sustain our number one position” in the industry, he stressed.
Speaking further on the OPL 281, Ezeafulukwe noted the group’s Gas-to-Power Initiative, which will see it commercialising the huge gas deposit, piping it to the Ughelli Plant. This is expected to take care of the plants gas needs, which constitutes 90% of its operating cost, which is according to Jibunoh, costs about N3bn monthly.
The gas-to-power initiative “means gas will be piped from the asset (OPL) to the power plant, thereby eliminating stories around gas, (and in the process) unlocking value in our energy business.”
On the medium term, he said, Transcorp Group is looking at opportunities that may arise via bid rounds, divestments and partnerships in the sector, and on the long-run (2027), petrochemical and fertilizer plants.
By the time OPL 281 is commercialized, Ezeafulukwe assured, oil production would be around 4,000 barrels per day and then grow to 10,000bpd.
Fielding questions, Ezeafulukwe said the group is studying also opportunities in renewable energy, particularly fossil fuel, even as oil and gas would not go away over the next 20 to 30 years.
“Let’s optimize the assets we have, while anticipating the future,” he said, in answer to a question on whether the need for huge investments in oil and gas assets going forward in view of the clamour for renewable energy.
Still on the sustainability of the growth so far, Jibunoh said events in the macro-economic landscape suggest that the current growth levels will be surpassed, helped by the progress recorded in the oil and gas business.
In the power segment, he said capacity is currently at 677.8mw with three turbines out and due to come back on stream soon, a total of 130mw would be added to available capacity, translating to more revenue and profit.
