United Power Generation & Distribution Company's profit fell 22 per cent year-on-year in the third quarter through March mainly for the gas price hike implemented since February.
Following a government decision, independent power producers (IPPs) like United Power and rental power plants had to purchase gas at Tk 14 per unit (one cubic metre), increased from Tk 5.02 per cubic metre.
Foreign exchange loss also jumped during the period. Consequently, United Power's profit eroded and its consolidated EPS (earnings per share) went down to Tk 4.28 for the latest quarter of FY23 from Tk 5.50 reported for the same quarter a year ago.
It imports oil on behalf of the government. Foreign exchange loss took place in L/C (letter of credit) payments for imports as the local currency became weaker against the dollar.
Earlier, companies could settle L/C payments in one month after opening the account. After the outbreak of the Covid pandemic, companies failed to settle L/C payments within one month due to the shortage of the greenback.
The timeframe was extended to as much as six months.
By the time of L/C settlement, the local currency was even cheaper than during the time of imports, said company secretary Mostak Ahmmed.
The taka was devalued by more than 13 per cent against the dollar in the nine months to March, according to the central bank.
United Power reported a foreign exchange loss of Tk 703.89 million for the nine months of FY23, increased from Tk 11.76 million for the same period of the previous fiscal year.
However, the cost of sales went down mainly because of reduced insurance premium and depreciation cost. General and administrative costs moved up due to a rise in bank charge and commission, director's remuneration, and fees of board meetings.
The demand for electricity declined in the last two quarters due to country-wide power cuts, said Mr Ahmmed.
Meanwhile, three fully-owned subsidiaries of United Power declared interim cash dividends of Tk 260-Tk 107,500 per share based on un-audited financial statements for the period ended in March.
On receiving the dividends, United Power's sole profit will rise in the next quarter, said the company secretary.
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