Payment delays put private power producers in trouble

Infographic: TBS

Delays in payments by the Bangladesh Power Development Board (BPDB) have put private power producers into losses.

Eight companies listed on the country's stock market have disclosed their financial statements for the first half of the current fiscal year, when four of them suffered losses.

And the remaining four experienced a decrease in their profit compared to the same period of the previous fiscal year.

According to officials at the companies concerned, usually they get energy charges for fuel imports and capacity charges for electricity generation from the BPDB. The charges are paid in dollars, and the fuel import costs are initially paid by the companies. After receiving the energy charges from the BPDB, the power producers adjust the costs.

And although there is a rule to pay the energy and capacity charges within 45 days of power supply, the BPDB is not doing so. It is allegedly making late payments mainly because of the dollar crisis.

Imran Karim, former president of the Bangladesh Independent Power Producers Association, told The Business Standard, "We are facing two types of problems due to late payments: borrowings from banks are increasing and losses on foreign currency exchange are increasing."

For example, he said, "We received the payment in September, which was due in April. In addition, we got the payment at the April dollar rate. But after receiving the payment in September, we had to pay the energy cost to the banks. But the rate of the dollar increased in September compared to April, and thus we had to count losses while adjusting these increased rates."

He said the increase in recent gas prices will not affect the profits of power companies because the gas bill is paid by BPDB.

"We only import fuel for power generation. That is why the appreciation of the dollar affects our profits," he added.

Shares of listed power companies were also affected by the drop in profits. Since September last year, the shares of most of the companies have been stuck at the floor prices set by the Bangladesh Securities and Exchange Commission (BSEC). No investor is bidding above the floor price to buy shares of the power companies.

According to financial statements, Baraka Power, Baraka Patenga Power, Khulna Power, and Shahjibazar Power incurred losses in the first half of this fiscal year.

According to Shahjibazar Power's report, the company suffered huge losses during the period due to a dollar exchange rate deviation. Besides, the company is suffering from a net operating cash crisis due to payment delays.

The report further said the import bill has been calculated at Tk84-90 per dollar for importing furnace oil. But the company had to pay the bills by buying dollars at the rate of Tk106-107.

Baraka Power said profit decreased due to a significant increase in exchange losses on foreign currency transactions.

Doreen Power said in its report that the company suffered because of a significant increase in its receivables from the BPDB due to an abnormal delay in the payment of revenue bills.

Power Grid suffers massive losses  

The state-owned Power Grid Company of Bangladesh Limited has incurred heavy losses due to the appreciation of the dollar.

The company has a huge amount of foreign debt. And while repaying this loan in dollars, it had to pay an additional Tk729.57 crore in the first half of the current financial year. However, the company had to buy dollars worth Tk75 crore to repay foreign loans during the same period of the previous year.

As a result, Power Grid had to incur a loss of Tk281 crore from July to December of the current fiscal year.

Power Grid said in its financial report that profit has decreased as total expenses have increased more than total income has increased. The main reason for the increase in expenses is foreign exchange loss.

The Dhaka Electric Supply Company (Desco), which supplies power to retail consumers, incurred a loss in the October-December quarter of the current fiscal year as it had to purchase bulk power at higher rates, although its retail price remained the same.

Md Mominul Islam, Desco's general manager (finance and accounts), commented on the loss, saying, "We are buying bulk electricity from the Bangladesh Power Development Board at a higher price, but we did not raise our consumer prices. This has choked our profits."

The government hiked the retail price of electricity by 5%, which will help the company make a profit.