…give reasons why AfriExim Bank Subsidiary, FEDA acquires 5% Equity
The management of Geregu Power plc plans to ramp up generation to 1,300 megawatts within the next two to three years. It plans to achieve this after it must have ran a combined circle operations on the basis of the two existing plants in Geregu.
The company already has an existing plant that generates 435 megawatts. In addition to this, it is also planning to acquire a nearby plant which has an installed capacity of 440mw.
“After this is achieved, we would then run a combined circle operation on the basis of the existing plants to ramp up capacity to 1,300mw
So we are looking at expansion of 900mw within a short period of two to three years,” Akin Akinfenwa, managing director and chief executive of Geregu Power plc said.
Aki Akinfenwa who spoke on the Arise Television on the planned expansion of the company, also gave reasons why Fund for Export Development In Africa (FEDA), the impact development unit of Africa Export and Import Bank (Afreximbank), has decided to acquire 5% equity in the company.
According to him, adherence to world class corporate governance and practices which in turn is driven by good leadership both at the board and the management level, is the first reason.
The second reason is FEDA’s firm believe in the company’s short, medium and long time goals towards becoming a power company of choice in Nigeria and in the West African sub-region.
He said the third one, which he consider as very significant, is FEDA’s believe in the Nigerian electricity supply industry as a key driver for structural transformation for trade on the African continent. “for me, these are the three broad messages that are responsible for this transactions”
He also stated the acquisition is a signal to other interested parties, especially when considering the status of AfrExim Bank and status of Geregu Power Plc in the power sector in Nigeria.
He, however, did not rule out the possibility of FEDA taking some strategic position in feature in the company.
“If you may recall, FEDA is also joining the state grid corporation of China as an additional investors, they have been here before FEDA, when you look at it, yes, it opens door for institutional and administrative investors that may want to be part of the growth of the power plant and its success story.”
On the company expansion plan, he said: “Our expansion goals are very, very, ambitious, and what i will say is that, in the short to medium term, we are trying to take advantage of our immediate environment, that is, Nigeria being a net exporter of fossil fuel. This mean our short and medium term goals are going to be predicated on thermal generation”
“You may recall in 2013 at the start of the privatization process and when we acquired Geregu Power Plc , the installed capacity was 414mega watts at a time. But effective capacity was less than 100megawatts. We ramped up capacity not only to 414 but also we increased it to 435mw. So today, we are 435mw of which 70 t0 80 percent of it goes to the grid because of grid constraints.
“Moving forward, what are these ambitious plans, the first thing to take ownership of our feedstock by ensuring we vertically integrate gas business which is obviously very crucial to generation. Thereafter we are positioned for the acquisition of a nearby plant to ramp up our capacity by another 440mw. This is a very short term business objectives.”
The FEDA obtained a 5 per cent stake in the electricity generating firm, Geregu Power recentlys.
“The purchase of the shares was concluded on the 21st of February 2023 with the purchase agreed in on the 21st of December 2022,” Geregu said in a note to the Nigerian Exchange.
Shares in the company accelerated by 10 per cent, the maximum allowed daily limit, as of 13:03 WAT to N246.4 per unit, its highest-ever price level, following the news.
The off-market deal transferred 125 million shares of Geregu Power to FEDA, making the organisation the biggest shareholder of the company after Femi Otedola.
Until the end of last year, Otedola held a 95.6 per cent interest in the company.
Afreximbank first announced the deal in early December and got approval from its internal approving authority later in the month.
In February, two of Otedola’s brothers – Paul Olurotimi Otedola and Ayokunle Michael Otedola – purchased 3.7 million shares worth N809 million and 4 million shares estimated at N876 million respectively in Geregu Power.
Olusola Bello
