Orion Pharma’s power subsidiaries seek extension
The contract of one of the plants has already expired in May and the other will follow in July this year
Orion Pharma Ltd has informed its shareholders that its two power generation subsidiaries are looking for contract renewal with the government.
The contract of one of the plants has already expired in May and the other will follow in July this year.
In a stock exchange disclosure on Wednesday, the listed drugmaker said, Orion Power Meghnaghat Ltd's power purchasing agreement (PPA) with the Bangladesh Power Development Board (BPDB) to supply electricity to the national grid has expired in May.
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The other plant built, owned and operated by Orion Pharma's subsidiary Dutch Bangla Power & Associates Ltd will see its PPA expire in July.
Both the heavy fuel oil-based 100MW quick rental power plants came into operation a decade ago.
The companies applied to the government for contract extension for another five years.
A decade ago, the government had largely embraced the quick rental and rental power generation strategy to urgently meet the then power crisis.
A decade later, the country is now running with abundant power and the government in principle has decided not to buy power from quick rental plants after the expiration of their existing contracts.
The development has turned to be a bane for listed companies who depend on such plants for revenue and earnings.
Khulna Power Company Ltd, the first ever private sector power producer, is an example of the problem being faced by stock market investors, as its two plants went off grid last week and the company is pursuing a contract renewal.
Meanwhile, the Bangladesh Securities and Exchange Commission has requested the government to rethink its decision not to renew the PPA with quick rental plants, especially the ones owned by listed companies.
