Costly dollar wipes out KPCL’s earnings in Q3

Khulna Power Company Limited (KPCL) incurred a net loss of Tk 2.31 crore in the January-March quarter of the current fiscal year.

The power producer generated revenues worth Tk 101.98 crore from the existing two power plants in the third quarter of the fiscal year 2022–23.

But the costly dollar, capital loss, higher production costs, as well as operating expenses led it to remain in losses, as per the company’s latest quarterly financial report.

The company is currently operating two power plants—115MW KPCL-2, and 40MW KPCL-1.

Earlier in April 2022, Khulna Power Company Limited had agreed to sell its 110MW barge-mounted power plant to US-based firm Accelerate Global Operations LLC for $1.45 crore.

Later in July last year, it had sold the plant at $1.32 crore, according to KPCL data.

The remnant amount was shown as receivable, which was under discussion for recovery, the power producer’s H1 financial report stated.

In this regard, the company in its third quarter financial report mentioned an adjustment of the difference between the book value and sale value of the KPCL 110MW plant.

Commenting on the issue, Mozammel Hossain, company secretary of Khulna Power Company, told The Business Post that they had a capital loss on the sold power plant. He, however, did not specify the amount of the loss.

A capital loss happens when a capital asset of an entity is sold at a lower price than the original purchase price.

The commercial operations of KPCL 115MW and 40MW got halted after the expiry of the government’s power purchase agreements (PPAs) with them on May 31 and May 28, 2021, respectively.

Later, following the renewal of the PPA, the operations of both power plants resumed on March 24 last year.

The company reported a loss per share of Tk 0.06 for the January-March quarter of the current fiscal, against the loss per share of Tk 0.06 for the same quarter last fiscal.

The company in its financial report also said its total revenues had increased almost six times in the third quarter of the fiscal 2022-23 year-on-year, but it failed to make a profit due to higher production costs as well as import costs due to the costlier dollar.

The company had revenue of only Tk 13.42 crore in the third quarter of FY22, as its power plants had been operational only for eight days that quarter due to the expiry of the PPA.

Although the power plants had been inoperative for almost 10 months in FY22, the company’s costs of sales jumped by 30 per cent that year because of the fixed maintenance expenses, according to the company’s latest annual report.

KPCL, the first private sector power producer in the country, also owns a 35 per cent stake in its sister concern United Payra Power’s 150MW plant.

KPCL shares closed at Tk 26.60 per share on the DSE trading floor on Sunday.