Gas-fuelled 584 megawatt Unique Meghnaghat Power has begun commercial operation and successfully connected to the national grid.
Unique Hotel & Resorts, which has a 37.24pc stake in the power plant, expects a boost to its profit with income from electricity generation, according to company secretary Md Sharif Hasan.
However, the $575-million power project built on a land of 18.75 acres at Sonargaon, Narayanganj has been financed with more borrowings than equity.
Seventy-five per cent of the fund came from domestic and foreign lenders.
Unique Meghnaghat Power received foreign loans of $463 million for a period of 15 years to meet the debt requirement. Standard Chartered Bank provided $270 million, Asian Infrastructure Investment Bank $110 million, Deutsche Investitionsund Entwicklungsgesellschaft (DEG) $45 million, and OPEC Fund for International Development $38 million.
Since Unique Hotel has made an investment in the Meghnaghat Power instead of owning the plant, any return from that will add to its income, but it will not bear any impact of the repayment burden or if the power producer incurs any loss.
The Bangladesh Power Development Board (BPDB) will purchase electricity from the independent power producer for 22 years, according to a stock exchange filing on Monday.
The Meghnaghat Power will receive capacity charge, meaning it will continue to get paid even if the plant remains idle, as per the agreement with the government, which will help offset part of the debt burden.
According to energy expert Professor M Tamim, capacity charge payment is a must for long-term projects. Operation models of such power plants are designed, keeping capacity charge into consideration.
Mr Tamim also said the debt-equity ratio is rational and common among power producers.
"The maximum debt-equity ratio can be 80:20. It would not be difficult for the company to make operations viable, while repaying the loans, as it has a guaranteed buyer for a long time."
"As the company [Unique Hotel] has a 37.24 per cent stake in Unique Meghnaghat Power, profitability of Unique Hotel will increase in the coming years," said Mr Hasan.
The country's largest combined cycle power plant, the Meghnaghat Power will use natural gas or imported re-gasified liquefied natural gas (R-LNG) for generating electricity, which will be supplied by state-owned Titas Gas Transmission and Distribution Company.
Company secretary Mr Hasan claimed the power plant is highly efficient and that it will generate electricity consuming half of the gas required for other power plants of similar capacity.
The power plant will serve 700,000 homes, he added.
Meanwhile, Unique Hotel and Resorts posted more than double profit in FY23, compared to FY22, owing to extraordinary income from share sale apart from business operations.
Selling off shares of the Meghnaghat Power, worth Tk 4.50 billion, to Qatar-based investment company Nebras Power Investment Management BV generated good earnings for the company. The luxury hotel gained an annual profit of Tk 1.89 billion in FY23.
Its half-yearly profit dropped 42 per cent year-on-year to Tk 265 million in July-December 2023.
However, Monday's disclosure tied to the Meghnaghat Power elicited optimism among investors, reflected in the 3.72 per cent price rise of Unique Hotel on the Dhaka Stock Exchange to Tk 61.40 per share.
The power plant was supposed to start commercial operation within 36 months after an agreement was signed between the Power Development Board and Unique Hotel in July 2019 but it took more time due to the pandemic.
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