Doreen Power estimates Tk1,100cr yearly revenue from subsidiary

Publicly listed independent power company - Doreen Power Generations and Systems Limited - will earn approximately Tk1,102 crore in yearly revenue from its subsidiary company - Chandpur Power Generation Limited - which started commercial operations from 11 February for the next 15 years.

According to a disclosure by Doreen Power on the Dhaka Stock Exchange (DSE) website on Monday, Chandpur Power has completed its 100 hours of Reliability Run Test (RRT) successfully as per its Power Purchase Agreement (PPA) with the Bangladesh Power Development Board (BPDB).

Chandpur Power is a 115 MW heavy fuel oil (HFO) based power plant at Chandpur.

The company submitted a letter to BPDB on 13 February for the issuance of a formal declaration certificate in this regard.

Doreen Power owns 99.9% shares of Chandpur Power. Besides Chandpur Power, the company has two other subsidiaries – Dhaka Southern Power Generation, and Dhaka Northern Power Generation – each having a 55 MW capacity. Doreen Power owns more than 99% stakes at both the subsidiaries which have been in commercial operation since 2016.

At present, Doreen Power supplies the national grid with 176 MW of electricity. It earned Tk666 crore by selling electricity in the last fiscal.

To set up the plant of Chandpur Power, Doreen Power invested Tk680 crore, out of which they took Tk520 crore syndicate loans under the supervision of lead arranger Dhaka Bank. The rest of the amount came from Doreen Power's own fund.

Chandpur Power and BPDB signed the PPA on 18 January 2018.

As per the agreement, the power plant was scheduled to start commercial production on 16 July 2019.

But, the production could not be started as per schedule due to a delay in imports of necessary machinery for setting up the plant, officials at Doreen Power said.

Meanwhile, import duty on HFO – a basic raw material for power plants – has pushed up the business cost of Doreen Power by 51% in the first half of the current fiscal compared to the previous one.

In the July-December period of FY22, its profit grew 26%, which is way lower compared to its consolidated revenue growth of 42%.

In FY21, the government imposed a 15% duty on the import of heavy fuel oil used for power generation.

In its financial statements, Doreen Power said that profit increased considerably, riding on a significant rise in revenue of its two subsidiaries, and a significant decrease in finance costs of the group because of a reduction in outstanding loans and interest rates.

At the end of the first half of FY22, Doreen Power's consolidated revenue stood at Tk463.59 crore, net profit Tk79 crore, and earnings per share Tk4.86.

Doreen Power got listed on the capital market in 2016. It had paid 13% cash and 12% stock dividends to the shareholders for FY21.

Its shares traded at Tk76.1 each on Monday at the DSE.