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Transcorp to Raise $1 Billion to Build Nigerian Power Plants

April 17 (Bloomberg) -- Transnational Corp. of Nigeria Plc, which has interests in industries ranging from agriculture to oil, plans to raise as much as $1 billion to build power plants as it seeks to triple profit in 2014.

“We think we can reach financial close by January 2015 and start construction” of a 1,000 megawatt gas plant, Chief Executive Officer Obinna Ufudo, 42, said in an April 11 interview in Lagos. The company will explore fundraising options including bank loans, selling shares or bonds, he said.

Nigeria sold control of 14 power companies to new owners last year including Siemens AG, Korea Electric Power Corp. and Lagos-based Transcorp to attract private investment to reduce blackouts. Transcorp bought the Ughelli gas plant in the Niger delta and plans to boost its output to 700 megawatts by the end of the year after spending as much as $300 million on turbine repairs, Ufudo said.

An increase in power generation capacity will help treble pretax profit to 30 billion naira ($185 million) this year, Ufudo said. “With the kind of expansion we plan in key sectors we operate, our vision is to make about 160 billion naira in profit by 2018,” he said.

After carrying out a feasibility study for the new plant, the company will start negotiations with equipment suppliers and meet financiers, Ufudo said.

International Hotels

Transcorp was set up in 2004 to invest in industries in Africa’s biggest economy. The company is 44 percent owned by Chairman Tony Elumelu and its market capitalization has increased almost tenfold to 148.3 billion naira since 2008, according to data compiled by Bloomberg. The shares fell 0.8 percent to 3.83 naira at close in Lagos, extending its decline this year to 12 percent. That compares with a 4.9 percent retreat by the Nigerian Stock Exchange All Share Index.

Transcorp plans to start the $500 million construction of three “international standard hotels” this year in the capital Abuja, Lagos and the oil-rich Rivers State and it will upgrade the existing 670-room Transcorp Hilton Abuja hotel, Ufudo said. The company has said it plans to build eight hotels under the Hilton brand by 2018.

“With improved occupancy and performance, our hospitality business is contributing to profit,” Ufudo said. “With Nigeria a strategic investment destination in Africa, we expect the hospitality business to continue to improve.”

The number of hotels in Nigeria rose 88 percent to 6,200 by the end of 2013 from 3,300 in 2011, Sally Mbanefo, director general of the Nigerian Tourism Development Corp., said in an e-mailed response to questions. The number of rooms rose to 186,000 from 99,000.

Fruit Production

A rebasing of the way Nigeria’s economy is measured for the first time in two decades showed that it’s the biggest on the continent, larger than South Africa’s, the National Bureau of Statistics said April 6. The country is Africa’s most populous with about 170 million people and also the continent’s biggest oil producer.

Transcorp opened a fruit concentrate production plant in the central Nigeria state of Benue last year with a capacity of 26,500 metric tons a year, Ufudo said. The company has secured land to start construction of another factory with a capacity of about 100,000 to 120,000 metric tons. “As the nation imports almost all of its fruit concentrate, the market is there for us to take,” he said.

The company is awaiting regulatory approval to begin pumping oil from its Lease 281 in the Niger River delta, Ufudo said. Transcorp jointly owns an oil lease with Johannesburg-based SacOil Holding Ltd. and London-based Energy Equity Resources Ltd. “We’ll start drilling this year if we get the approval,” Ufudo said.

To contact the reporter on this story: Emele Onu in Lagos at

To contact the editors responsible for this story: Vernon Wessels at John Bowker

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