The government has canceled the power purchase agreement (PPA) with another 22MW plant of Doreen Power Generations and Systems, exposing investors to a greater risk of losing their investment.
The plant in Narsingdi stopped power generation in December 2023 upon expiry of its 15-year contract with the government.
In April 2023 before the expiry of the power purchase deal, the independent power producer sought a 10-year extension of the contract so that it could continue supplying electricity to the Bangladesh Rural Electrification Board (BREB).
Responding to the application, the government in February 2024 allowed Doreen Power's Narsingdi plant to supply electricity for another 5 years on "no electricity, no payment" basis.
However, the plant could not resume operation as the company was in the process of negotiating tariffs and other terms with the BREB.
"Bangladesh Rural Electrification Board (BREB) is not interested in renewing the power purchase agreement further," said the company in a regulatory filing on Thursday.
Following the news, the stock plunged 2.69 per cent to Tk 21.7 per share on the Dhaka bourse on Thursday. It has plummeted 64 per cent since the removal of the floor price in January last year.
Market analysts say the cancellation of the agreement with Doreen Power's another plant will impact general investors' return on investment in future.
Doreen Power's financial performance has been on the decline after the closure of two plants previously, said Akramul Alam, head of research at Royal Capital, adding that the shutdown of the third plant will erode its income further.
Established in 2007, Doreen Power had been operating three gas-fired plants with the capacity of 22 megawatt each in Feni, Tangail and Narsingdi. They were shut between November 2023 and February last year as their 15-year power purchase deal with the government expired.
The company was waiting for contract renewal during the previous Awami League government.
After the political changeover in August last year, the board realized that the possibility of contract renewal is slim as Doreen Power is owned by former Awami League MP Nur E Alam Siddique.
The company's managing director is Tahzeeb Alam Siddique, son of Nur E Alam Siddique, and chairman is Anjabeen Alam Siddique, wife of Mr Tahzeeb.
Meanwhile, Doreen Power sold the equipment of Tangail and Feni power plants out of fear that their contracts would not be renewed after the political changeover, said a leading stockbroker, requesting not to be named.
A company official said the company holds almost 100 per cent stakes in three subsidiaries -- Dhaka Northern Power Generations, of 55MW; Dhaka Southern Power Generations, of 55MW, and Chandpur Power Generations, of 115MW.
"Although we had no operating income from the closed plants for the last two years, we are getting income from three subsidiaries as we have almost 100 per cent stakes in there," said the company official.
According to the Dhaka Stock Exchange (DSE), sponsor-directors have 66.61 per cent stakes in the company while the general public has a stake of 15.23 per cent and institutes have 18.16 per cent shares in Doreen, as of February this year.
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