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Former Special Adviser to the Central Bank Governor on Infrastructure and Industry, Ebipere Clark, has asserted that Geregu Power’s sharp decline in revenue and profitability requires closer scrutiny, questioning whether the company’s earlier strong performance reflected a “liberal” interpretation of revenues owed to it by the Nigerian Bulk Electricity Trading Plc (NBET).
Speaking in an interview with ARISE NEWS on Wednesday, Clark said the company’s financial performance had changed significantly following the change in management and a period of turnaround maintenance, but argued that the scale of the decline could not be explained by maintenance alone.“
As to the drop in revenue, which is probably more significant, especially to the shareholders, that needs to be interrogated and similarly, one could have some sort of ideas as to why there was such a massive drop in revenue. One thing I would say is that Geragos is a thermal genco. So two-thirds of its monthly bill is essentially payment for gas.
And there may have been a different sort of payment schedule that might have explained part of it. But even then, that would be part of it, not all of it.
”He further suggested that Geregu’s previously reported profitability may have been influenced by how revenues owed to the company by NBET were accounted for. ”I don’t think that the power sector itself has changed as much as the profits of Gerigou has changed. But yes, there has been a turnaround maintenance and that might account for the drop in revenue.
But I do imagine that for Gerigou to be so profitable, before the handover, there would have needed to have been a liberal interpretation of the revenues owed to it by Enbet.
And that liberal interpretation may have changed now with the change of management.”
Clark’s questioned the recent backdrop against Geregu Power’s recent default on its corporate bond, which he described as the first corporate default in Nigeria in seven years and the first such default in the power sector. “Profit’s a very strange thing, how corporate profits are accounted for, we have a situation where the generation companies themselves are being paid a fraction of what they’re meant to receive.
Now, the accounting treatment of that money that is owed to them by Enbet and how you treat that will have a significant change on the profits you report. So I would imagine there is now a completely different way of how they are reporting their profits relative to how they reported their profits before that might explain part of the change.”
