Otedola’s Geregu generates lowest revenue in 3 years, loses N23.33bn to Shell’s force majeure

Geregu Power Plc generated its lowest revenue in three years, Ripples Nigeria learnt on Wednesday after obtaining the company’s 2022 Full Year financials.

According to the corporate disclosure, Geregu’s revenue dropped by -32.8 per cent year-on-year to N47.61 billion in 2022, as the management couldn’t surpass the N70.95 billion generated a year before.

Ripples Nigeria gathered that the last time Geregu recorded turnover below N50 billion was in 2019 when the firm, owned by billionaire, Femi Otedola, grossed N42.16 billion.

The revenue dropped on decline in earnings from Energy sold and Capacity charge, with both raking in N30.25 billion and N17.36 billion respectively last year.

Earnings from Energy and Capacity charges in 2022 fell short of the N45.69 billion and N25.26 billion respectively grossed between January to December 2021.

What happened to Geregu’s revenue?

Geregu lost N23.33 billion or –32.8 per cent of its revenue in 2022 after a nationwide force majeure (FM) declared by Shell Petroleum Development Company Limited (SPDCL).

Read also:Sell-off in Geregu, Thomas Wyatt drags Nigeria’s capital market down

Force majeure is a clause in a contract that enables a company to shut down operations during a natural disaster or other unforeseeable circumstances that prevent a company or someone from fulfilling a contractual obligation. This protects the firm from lawsuits or sanctions for failing to carry out its responsibility.

Shell Petroleum had declared the force majeure on the Trans-Forcados pipeline, ceasing operation or gas supply on July 17, 2022.

This disrupted Geregu’s operation, as the power plant couldn’t receive gas supply from Shell, its major supplier, till the end of November 2022.

“As a result of a nationwide force majeure (FM) declared by Shell Petroleum Development Company Limited on the Trans-Forcados pipeline and its consequent effects on the Forcados oil terminal, gas supplies to the plant by Its primary gas supplier ceased from 17th of July 2022.

“The maintenance works on the pipelines were however completed at the end of November 2022 and gas supplies and normal operations have since then resumed,” Geregu said about the decline in its 2022 earnings.

Meanwhile, the bottom line of Geregu also depreciated to the lowest in four years, as it closed last year with N10.17 billion net profit, which is 50.5 per cent below the N20.55 billion profit after tax of 2021. It also falls below the N10.39 billion net profit recorded in 2019.

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