Dollar crisis brings power producers to their knees

The country’s power producers are continuing gasping as the ongoing unprecedented depreciation of the local currency against the US dollar has put them on the verge of a disaster.

Out of the nine power companies listed with the capital market, 78 per cent, or seven companies, suffered profit falls in the first nine months of the current fiscal year, while the rest two firms sank into losses.

The prices of fuel oil or energy – gas, coal, diesel or furnace oil – needed at power plants for generating electricity, went up many times due to costly dollar since the start of the Russia-Ukraine war.

This situation pushed up production costs of all the power producers, draining their earnings, industry insiders said.

Meanwhile, the country has now been facing a severe dollar crisis, which has forced the government to put restrictions on the opening of letters of credit (LCs), curbing the imports of necessary fuel oil or energy needed for the power industry.

Due to the shortage of fuel oil and energy, the country’s power producers were failing to produce electricity at their full capacity, mutilating their profitability, several persons with knowledge of the matter told The Business Post.

The country’s listed power producers are United Power Generation & Distribution Company Limited, Summit Power Limited, Baraka Patenga Power Limited, Baraka Power Limited, Dorren Power Generation and Systems Limited, GBB Power Limited, Khulna Power Company Limited, Shahjibazar Power Limited, and Energypac Power Generation Limited.

In terms of earnings collapse, Baraka Patenga Power suffered the most, as the power producer reported a net loss of Tk 18.16 crore in the July-March period of the fiscal year 2022-23, against a profit of Tk 54.66 crore in the same period last fiscal.

Mohammad Rana, company secretary of the listed firm told The Business Post their earnings got collapsed due mainly to the weaker value of the taka against the US dollar, while the energy crisis also hampered their productivity significantly.

The company’s earnings per share fell to Tk 1.05 negative in the July-March FY23 from Tk 3.16 in the corresponding period last fiscal.

Khulna Power Company Limited (KPCL) is another power producer which suffered big losses in the first nine months of the current fiscal.

The country’s first independent power producer witnessed a net loss of Tk 81.86 crore during the July-March period of FY23 against a loss of Tk 9.53 crore in the same period last fiscal.

The listed company’s EPS was down to Tk 2.06 negative in the July-March period of FY23 from Tk 0.24 in the corresponding period last fiscal.

Due to the costly dollar, as per the company, it had to spend more capital for the import of fuel oil, the prime reason that hamperred its earnings.

Baraka Power Limited registered a net profit of Tk 6.35 crore in the first nine months of the fiscal 2022-23, which was almost 90 per cent lower than the profit of Tk 59.57 it made in the corresponding period of the fiscal 2021-22.

The power producer’s EPS dipped to Tk 0.27 in the July-March of the current fiscal from Tk 2.53 in the same period of FY22.

Shahjibazar Power Company Limited made a slim profit of Tk 8.95 crore in the current fiscal’s first nine months against the hefty profit of Tk 100 crore in the same period of FY22.

SPCL Company Secretary Yeasin Ahmed blamed the steeper depreciation of the local currency taka against the US dollar for the massive fall in their profits.

“Our production cost has gone up many times due to the weaker taka, eating up our profits,” he told The Business Post.

With the biggest power generation capacity, United Power Generation and Distribution Ltd witnessed an 18.5 per cent year-on-year slump in its profit to Tk 819 crore in the first nine months of FY23.

The company, according to its officials with knowledge of the matter, faced a lesser impact as supplies electricity to the export processing zones and its sales agreements are also different from others.

Its EPS dropped to Tk 14.13 in July-March FY23 from Tk 17.34 in the same period of FY22.

Summit Power Ltd (SPL) posted 28.3 per cent decline in its net profit to Tk 218 crore in the July-March period of the fiscal year 2022-23.

Its EPS dropped to Tk 2.05 in July-March FY23 from Tk 2.85 in the same period of FY22.

The profit of Dorren Power Generation and Systems Limited dropped to Tk 32.42 crore in the first nine months of FY23 from the Tk 133.3 crore in the same period last fiscal.

GBB Power Limited posted a net profit of Tk 8.14 crore in the in the first nine months of FY23 against the profit of Tk 8.85 crore crore in the same period last fiscal.

Energypac Power Generation Limited reported a net profit of Tk 15.97 crore crore in the first nine months of FY23 which was Tk 24.91 crore in the same period last fiscal.