Power Grid to issue Tk1,324cr into preference shares for govt

Infographics: TBS

Power Grid Company of Bangladesh (PGCB), a state-owned power transmission company, is set to convert Tk1,324 crore in share money deposits received from the government for its development projects into preference shares.

In a letter dated today (17 February), the Bangladesh Securities and Exchange Commission (BSEC), the capital market regulator, approved the issuance of the shares in favour of the secretary of the Power Division under the Ministry of Power, Energy and Mineral Resources.

Under the government financing structure, 60% is treated as equity and the remainder as loans, with the equity portion recorded as deposits for shares. At the end of June 2025, PGCB's outstanding share money deposits stood at Tk2,954.81 crore. 

Power Grid has already issued 20.10 crore general shares and 1,014.65 crore irredeemable and non-cumulative preference shares at Tk10 each in favour of the secretary of the Power Division.

According to company sources, Tk1,324 crore was received from the government in the 2023–24 fiscal year, and the company is now proceeding with the share issuance to comply with a notification issued by the Financial Reporting Council (FRC).

Preference shares are company shares where dividends are paid to shareholders before dividends are distributed to common stockholders. The government will receive dividends on the preference shares at a fixed rate before any dividend is declared or distributed to general shareholders.

The dividend rate for the government on the preference shares will be determined as a percentage of total capital, calculated as 25% of the assumed share of net profit after tax attributable to the preference shareholders.

Explaining the dividend mechanism to The Business Standard, Power Grid Company Secretary Md Jahangir Azad said, "Suppose preference shares account for 25% of the company's paid-up capital. If the company makes a profit of Tk100 in a financial year, the entitlement of the preference shares would be Tk25 from that profit. The government would then receive a 25% dividend on this Tk25 allocated to the preference shares."

Regarding the issuance of preference shares, he added, "We are instructed to convert share money deposits into shares within six months after the end of the fiscal year. That is why we are gradually converting share money deposits into preference shares."

In the first half of the current fiscal year, Power Grid's revenue grew by 9% to Tk1,671 crore, and profit soared 236% to Tk476 crore.

Its shares closed at Tk33.70 each yesterday, down 2.03% from the previous trading session.