With 3 plants expired, Doreen Power relies on subsidiaries
Following this news, its shares decreased by 2.69%, closing at Tk21.70 on the Dhaka Stock Exchange.
Doreen Power Generation and Systems – which made its debut in 2007 with three new plants – now relies on its subsidiaries to stay afloat as the power purchase agreements (PPAs) with the government have expired, with no hope of renewal.
Following this news, its shares decreased by 2.69%, closing at Tk21.70 on the Dhaka Stock Exchange.
The Narsingdi 22MW power plant has been shut down since December 2023 and lost hope of revival after the Bangladesh Rural Electrification Board (BREB) declined to renew the PPA on 11 March, according to a stock exchange filing on Thursday (13 March).
Similarly, the 22MW Tangail power plant and the 22MW Feni power plant were permanently closed in 2023 and 2024, respectively, due to the expiry of their PPAs with the Bangladesh Power Development Board (BPDB).
Keep updated, follow The Business Standard's Google news channel
The PPAs of three gas-based power plants have already expired, and two have been sold. We are planning to expand our business in the renewable energy sector in the future
Two of the plants began commercial operations in 2008, with the third following in 2009, all under a 15-year agreement to sell electricity to the government.
In this situation, Doreen Power Generation will now need to rely on the business and earnings of its subsidiaries, according to company officials.
The subsidiaries include Dhaka Northern Power Generation and Dhaka Southern Power Generation, each with a capacity of 55MW, totalling 110MW, and Chandpur Power Generation with 115MW.
Tahzeeb Alam Siddique, managing director of Doreen Power, pointed out the company's future plans in its annual report for the fiscal 2023-24, stating that it is progressing with a long-term vision to achieve excellence in the country's fuel and power sector.
"Our six power plants, including three plants owned by our subsidiaries, are operating efficiently and effectively as per plan and requirements," he said.
"The PPAs of three gas-based power plants have already expired, and two were sold by this time. We are now waiting for the renewal of the Narsingdi plant's PPA. We are also planning to expand our business into the renewable energy sector in the future," he added.
According to officials, the company has three subsidiaries with a combined capacity of 225MW. These plants are major revenue earners in the company's consolidated revenue.
"We are not concerned about the shutdown of the three power plants, as the subsidiaries' earnings significantly contribute to the listed company's revenue. With the earnings from the subsidiaries, Doreen Power Generation will be able to pay returns to its shareholders," said Company Secretary Muhammad Amzad Shakil.
"We raised funds from the capital market by issuing shares to invest in the company's subsidiaries. The subsidiaries are operating at full capacity, and their operations are running smoothly. Therefore, the income from the subsidiaries will help the parent company stay afloat," he added.
According to the Dhaka Stock Exchange, Doreen Power Generation raised Tk58 crore from the capital market in 2016.
BSEC forms enquiry committee
With no hope of renewing the power selling agreement with the government, Doreen Power Generation has decided to sell non-current assets from two power plants.
In this regard, the power generation company has signed deals with two private firms to sell equipment from the 22MW Tangail Power Plant and the 22MW Feni Power Plant.
Muhammad Amzad Shakil said, "All the equipment in the plants has been sold, and the buyers are gradually taking them from the plants. As per the decision, the land will be sold later. However, the non-current assets of the 22MW Narsingdi power plant have not yet been sold."
To oversee the sale of non-current assets, the Bangladesh Securities and Exchange Commission (BSEC) formed a three-member enquiry committee to investigate the matter. The committee, formed in February this year, was given 60 days to submit its report.
Financials
According to its annual report, Doreen Power Generation earned a total of Tk1,333.26 crore in consolidated revenue and made a profit of Tk32 crore in the fiscal 2023-24.
Of the total revenue, Doreen Power Generation and Systems earned Tk117.59 crore on a standalone basis, while its subsidiaries contributed Tk1,215 crore in revenue – Dhaka Northern Power: Tk263.27 crore, Dhaka Southern Power: Tk263.83 crore, and Chandpur Power: Tk688.56 crore.
The company paid a 10% cash dividend to its shareholders.
