Higher borrowings to expand transmission lines across the country are costing Power Grid more than expected, as the taka has kept losing value against the dollar, and that wiped out its profit in FY23.
Its debt burden swelled 29 per cent year-on-year to Tk 401 billion until June this year in the continuation of infrastructure development to improve and expand power coverage. A large chunk of the loans came from foreign sources and development partners, which pushed up repayment burden with the devaluation of the taka.
As the country's sole authority to ensure power transmission, it has been working towards "Vision 2041" sketched out under the Power System Master Plan (PSMP) 2016.
Power Grid's main objective in this is to build a strong national grid network that requires construction of 6,867km-long transmission lines and 103 substations.
It has recently completed two projects. A 400KV transmission line from Aminbazar to Maowa cost Tk 22.06 billion, financed by the Asian Development Bank, the government and from its own fund.
Another transmission line of the same capacity has been installed from Patukahli to Gopalgonj at an expense of Tk 24.58 billion. Partially funded by the government, the 163km long double-circuit high voltage line connects the newly built 400/230kV grid substation in Muksudpur upazila of Gopalganj with Patuakhali's Payra via Patuakhali Sadar, Barguna, Jhalakathi, Barishal and Madaripur.
Fifteen other ongoing projects are designed to build sub-stations in different parts of the country. A transmission line will also be drawn up to connect Rooppur Nuclear Power Plant with the national grid.
After the completion of the projects, electricity transmission will get greater coverage, while power cuts and system loss will be reduced, said company secretary Jahangir Azad.
In FY23, the transmission network was extended by 700 kilometers, while three sub-stations were set up.
The company had to take loans even after June this year, increasing its debt burden to Tk 419.44 billion by the end of September, to continue its development works.
All the investments have cost Power Grid heavily and will cost even more due to a loss escalation in foreign currency transactions.
Power Grid generated operating profit amounting to Tk 9.50 billion in FY23, but foreign exchange transaction losses worth Tk 12.75 billion dragged it into the red. The result was a record loss of Tk 6.26 billion in FY23.
The FY23 loss was a breakaway from the company's consistent profits since its establishment, as it enjoyed a monopoly in business.
Its business growth may remain slow in terms of income even after the completion of the 15 projects by June 2025, as it has planned six more new projects to be executed between December 2028 to December 2030.
However, revenue has already started going up, with a 4.5 per cent year-on-year rise to Tk 24.40 billion in FY23.
Md Sajedul Islam, senior vice president of the DSE Brokers Association of Bangladesh, is skeptical about the company's returning to profit soon, as it has huge foreign currency loans.
"The dollar price is soaring and there is no sign of a stable foreign exchange market anytime soon."
But as the company invested heavily on the overall electricity transmission system, its revenue may increase further in the future, and if that happens, investors will be benefited, added Mr Islam.
© 2024 - All Rights with The Financial Express
