Khulna Power's fate sealed after shutdown of plants

FE REPORT | Published: October 28, 2024 22:00:50

Khulna Power Company decided to shut down its remaining two power plants as the government has stopped demanding electricity from it.
It had a total of three plants. KPCL Unit I of 110-megawatt capacity was sold a few years ago. After the closure of two other power plants -- KPCL Unit II of 115 megawatts and KPCL Unit III of 40 megawatts, the company will not generate any operating income.
The latest decision was announced on Monday.
Earlier this year, the power producer declared that it would resume operations of KPCL Unit II and KPCL Unit III on a "No Electricity No Payment" basis. There were announcements too of operation resumption in May this year.
The plants' shutdown will jeopardize the possibility of general investors' receiving any return from their investments in the company.
According to the Dhaka Stock Exchange (DSE), 20.76 per cent shares of the company are in the hands of general people, while overseas investors have a 0.1 per cent stake, institutes have 9.15 per cent shares and the rest are with the sponsor-directors.
Meanwhile, the stock lost 64 per cent of its market value to Tk 9.6 per share in the last two months to Sunday. On Monday, the stock jumped 25 per cent to Tk 12 per share on the DSE.
"We will have no operating income from now on as the plants are closed but we will have some dividend income from our associate company United Payra Power Ltd. as we have a 35 per cent stake there," said company secretary Md. Mozammel Hossain. Financial Performance
Khulna Power's financial performance has been on the decline for the last few years.
It showed a first-time loss of Tk 664.53 million for FY23 since its listing in FY10.
Last year, the company declared 10 per cent cash dividends but failed to pay. So, the regulatory authority changed its status from 'A' stock to junk stock.
On Monday, it disclosed a profit of Tk 59.61 million earned in FY24 and again declared 10 per cent dividends for the year. Whether the company will be able to pay the dividends remains uncertain since it could not clear its previous dues.
Market experts say that allowing the listing of companies with a "short life" was a wrong move.
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