The Financial Analysis of Geregu Power Plc.
Creators: name: Imoh Umah*
name: Silva Opuala- Charles
name: Adejoke Umaigba
Publisher: name: Zenodo
Year: 2025
Subjects: Geregu Power Plant, Financial analysis; Nigeria; capital expenditures.

description: Executive Summary: Geregu Power Plc “The company or GPP” is a Nigerian power Generation Company that operates a thermal power plant in Ajaokuta, Kogi State. It is one of the successor companies to the unbundled Power Holding Company of Nigeria, PHCN in 2013 as part of government power sector reforms. The nameplate capacity for their power plant in Kogi is 435 megawatts (MW) in the three fired units which utilizes natural gas for power generation. Amidst the myriad challenges in the power generating sector, which spans inadequate gas supply, transmission challenges as well as distribution and collections inefficiencies, the company is still able to turn out excellent financial performance by supplying their customers with power. 

Adequate power generation in Nigeria has a positive impact in Nigeria’s GDP. The company aims to accelerate economic growth through sustainable power generation in Nigeria by supplying electricity to the national grid and this plays a vital role in meeting the growing demand for power in the country. Another important contribution to the macroeconomic is the supply of clean energy. As part of the global steer to reduce carbon emissions, the Geregu Power Plant utilizes gas turbines as a clean energy source to generate power which is cleaner and a more sustainable energy source

As part of the growth strategy for the company, the sum of $100 million (USD) was invested to carry out a major overhaul to ensure 100 percent efficiency of the power plant and to increase the capacity to 435MW. This achievement was the short-term strategy of the company. The look ahead for the power plant in the medium-term is to increase its capacity to 1300MW, the front-end engineering design (FEED) for this expansion is ongoing. 

 In 2023, the company recorded a 74% growth in revenue which was better than the 32% decline in 2022 against the previous year. Despite the challenges in sales faced over the years, the company has been able to maintain good financial prudency. This is evident in its gross profit margin over the years, gross Profit Margin 2020: 42.55%, 2021: 46.99%, 2022: 48.60%, and 2023: 51.46%. 

The company liquidity to asset ratio is trending upward, 2020: 1.98, 2021: 1.92, and 2022: 2.05. The financial resilience of the company booster’s investor’s confidence. Also, profitability and liquidity trends indicate potential for favorable dividend distributions (Return on Assets 2020: 16.78%, 2021: 16.95%, 2022: 8.32%, 2023: 13.40%). Nevertheless, a balanced approach to capital allocation is essential to align dividend payouts with strategic objectives and capital reinvestment needs.

Geregu performance at the Nigeria stick exchange to enable the firm raise capital enhances its growth opportunities, research and development, marketing, and capital expenditures. The company’s performance at the stock market is also highly commendable, that is in 2022 the shares initially listed at N110 per share and N275 billion in market capitalization and rose to about N1000 Per share in 2024.

In conclusion, Geregu Power Plc stands poised at the nexus of opportunity and challenge. By addressing areas of concern and implementing recommended strategies, the company can strengthen its financial position, enhance operational efficiency, and emerge as a frontrunner in Nigeria's dynamic energy landscape.