Auditor flags business continuity risk for Doreen Power

The auditor of Doreen Power Generations and Systems has raised a soft question about the company's business continuity, as it earns no revenue on its own while showing profits derived from its subsidiaries.
The auditor's concern was highlighted in a filing on the Dhaka Stock Exchange (DSE) on Tuesday.
According to the auditor, the private-sector electricity producer initially had three gas-based power plants, but over time all of them lost their contracts with the government.
A note in the financial statements says that the power purchase agreements (PPAs) with the Bangladesh Rural Electrification Board and the Bangladesh Power Development Board for the three gas-based power plants with a combined capacity of 66 MW, valid for a period of 15 years, expired in November 2023, December 2023, and February 2024 respectively.
Due to the expiration of these contracts, they earned nothing in FY25. The company's solo financial statement shows no revenue, only expenses, resulting in a loss of Tk 476.16 million according to the profit and loss statement.
However, in the consolidated statement, the company has reported a profit of Tk 584.84 million.
Although the three gas-based power plants have been shut down, the company has three almost fully-owned furnace oil-based subsidiaries with a total capacity of 225 MW. These plants are currently operational, and the PPAs of the subsidiaries will expire on June 16, 2031, August 16, 2031, and February 10, 2037 respectively.
Accordingly, the company will receive dividends from its subsidiaries and will be able to bear its operational expenses out of these dividend receipts.
The auditors raised the question because the main company is incurring losses while continuing to service loans.
However, the management believes they will survive.
Based on this circumstance, the management believes that the company will continue its operational existence in the foreseeable future despite having a net loss for the year, supported by dividend receipts and temporary loans from its subsidiary entities.
Meanwhile, the share price of the company rose by 2.84 per cent to Tk 29 on Tuesday on the Dhaka Stock Exchange.

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