Geregu Power Plc, one of Nigeria's leading power generation companies, reported a significant increase in revenue and profit for the first half of 2026, but its cash flow from operations turned negative, casting a shadow over its financial health. According to the company's unaudited financial statements, revenue rose to N183.4 billion from N121.6 billion in the same period last year, a 50.8% increase, while profit after tax more than doubled to N76.8 billion from N36.2 billion. However, cash generated from operating activities plunged to a negative N55.1 billion, compared to a positive N24.3 billion in the previous year.
Rising Receivables and Unpaid Invoices Drive Cash Crunch
The primary driver of the cash flow deterioration is a sharp increase in trade and other receivables, which ballooned to N449.3 billion as of June 30, 2026, up from N298.7 billion at the end of 2025. This means that while the company recognizes revenue, it is not collecting cash from its customers, primarily the Nigerian Bulk Electricity Trading Plc (NBET) and other distribution companies. The company's Chief Financial Officer, Ayo Osinubi, explained, "The increase in receivables is largely due to delayed payments from NBET, which owes us for electricity supplied. We are actively engaging with the authorities to accelerate collections."
Impact on Liquidity and Dividend Sustainability
The negative operating cash flow raises questions about Geregu Power's ability to fund its capital expenditure and maintain its dividend policy. The company had earlier declared an interim dividend of N10 per share for 2026, but with cash flow under pressure, investors are concerned about the sustainability of such payouts. In the first half, net cash used in investing activities was N18.2 billion, while financing activities provided N45.0 billion, partly through new borrowings. As a result, cash and cash equivalents fell to N12.4 billion from N40.6 billion at the end of 2025.
Market Reaction and Outlook
Following the release of the results, Geregu Power's share price dropped by 4.7% on the Nigerian Exchange, reflecting investor disappointment. Analysts at CSL Stockbrokers noted, "The strong profit growth is overshadowed by the worsening cash conversion cycle, which could limit the company's ability to pay dividends unless collections improve." Geregu Power, which operates a 435-megawatt gas-fired plant in Kogi State, plans to increase its capacity to 700 megawatts by 2027, but this expansion will require significant capital. The company's management remains optimistic, stating that it expects to recover a substantial portion of the receivables in the second half of the year. However, without a clear timeline for NBET payments, the cash flow problem may persist, affecting both operational flexibility and shareholder returns.
