Home ›› 17 Nov 2021 ›› Front
One of the major stakeholders of private sector power generation company Summit Power Ltd will set up a 200-megawatt solar power plant in the port city in order for a greener and sustainable solution to the country’s power sector.
In this regard, the company has submitted to Bangladesh Power Development Board a proposal, which is under consideration, and if approved, it would be Summit’s first solar power project, according to the company’s latest annual report.
An official of the company told The Business Post that the amount of investment in the solar power project has not been decided yet; the financing issue will be settled following the assent of the authorities concerned.
If the Summit proposal is approved, it will be the second largest renewable energy power plant while the first of its kind is likely to be Bexi power of Beximco Group, which is currently raising money from the capital market through Green Sukuk to set up a similar 200-megawatt solar power plant in Gaibandha.
Renewable energy is being emphasised all over the world to keep global warming at bay. Bangladesh is also a signatory of the global temperature issue, but it has yet been able to proceed as planned.
According to the Energy Tracker Asia, the installed renewable energy capacity of Bangladesh is 650.53 megawatt (solar energy 416 megawatt and hydropower 230 megawatt). The total figure was up from 579 megawatt in 2018.
Even though solar power dominates the renewable energy mix of Bangladesh, wind power for now remains at a near-zero value.
While the government targets 10 per cent renewables in the total energy mix by the end of 2021, the figure at the moment is only 3 per cent.
Bangladesh wants to increase the amount of renewable energy to 20 per cent of total consumption by 2030, thus stressing the need for clean and green energy.
Summit Power is actively considering the cross-border import of electricity from clean sources, highlighting greener solution, which is the next generation power policy.
In the annual report, Summit Chairman Muhammed Aziz Khan said: “We are gearing up for a greener solution to energy at a reasonable price, and are focusing on cross-border import at a cheaper rate of green energy such as wind, water or solar power from India, Nepal and Bhutan as the price of LNG has soared.”
“Summit is also working on how to provide LNG at a much more reasonable price.”
The current trend towards LNG prices could put pressure on the economy.
Earnings and dividend
According to the latest annual report, Summit Power revenue and net profit after tax has been increasing for the last five financial years in a row. The company gained Tk 560 crore profit in the last financial year and recommended 35 per cent cash dividend.
According to the annual report, the industry average profit was Tk 197 crore in the last fiscal whereas Summit made a profit of Tk 560 crore, contributing to the national exchequer Tk 37.8 crore in FY21.
Despite the pandemic, it has managed to maintain its operational efficiency and financial performance this year through proper planning and prompt initiatives.
Risk and potential
The Summit annual report mentioned a series of potentials as well as a few risks.
It said the company may face fluctuation in currency conversion from BDT into USD or vice-versa while settling foreign currency depended liabilities and while collecting USD-based revenue component.
Interest expenses of loan and borrowings may increase. The company has entered into the interest rate SWAP agreements to cover the variability in LIBOR for foreign currency loan and interest on local loans, which are mostly stable.
Summit foreign loan stands at $ 331.36 million till June 30, 2021.
The government is encouraging private sectors to invest in power sector for reducing scarcity of electricity in line with the vision 2041 when 60,000 megawatt of electricity is projected to be required.
The government keeping in mind of 60 gigabyte energy demand by 2041 has been working on how to implement adopted plans aimed at appropriate ‘energy mix’, distribution to grids and transmission lines so that business could be better in future.
The capacity of Summit
Summit Power owns and operates 15 power plants in different locations across the country having a total installed capacity of 976 megawatt accounting for 10 per cent of the total capacity of private sector power plants with 10,641 megawatt.
The total generation capacity has now been 1,578.38 megawatt in which Summit has direct/indirect association and it is around 6.25 per cent of the total capacity of the country with 25,235 megawatt.
The company was listed in the capital market in 2005, and trades as ‘A’ category company having Tk 1,771 crore in surplus reserves and Tk 4,303 crore in market capitalisation.
On Tuesday its share price declined 2.48 per cent to Tk 39.30.
