On October 5th, Geregu Power plc listed 2.5 billion shares at a ₦100 per share, raising the company’s market capitalisation to ₦250 billion. As of the 21st of October, it was the 10th most traded stock in terms of value on the NGX. It was a historical moment because Geregu Power is the first power company to list on the Nigerian stock exchange.
However, it’s not shocking that the first power company to list on the stock exchange is a generation company, given that the distribution companies are struggling and the Transmission Company of Nigeria (TCN) is government-owned.
You see, the on-grid power sector is made up of three players. First, the generation companies (gencos) produce electricity from gas (like Geregu) or water, also known as hydroelectricity (like Kainji dam). Next up, the Transmission Company of Nigeria (TCN) transmits the generated electricity from the gencos to the distribution companies, like EKEDC or Ikeja disco, which we should be a little more familiar with. The distribution companies, the power value chain's downstream end, ensure the electricity gets to Nigerian homes and businesses.
But there’s a vast funding problem with the power sector caused by liquidity challenges. The discos’ job of making sure we get electricity also includes making sure we pay for it. They ensure this by installing pre-paid meters, sending monthly bills and setting up payment collection infrastructure for easier payments. This includes digital and physical infrastructure from payment offices to mobile apps, payment gateways and even good old-fashioned door-to-door collection.