The auditor, after reviewing the FY23 financial statement of Khulna Power Company Ltd (KPCL) – the country's first independent power producer – has expressed doubts about the company's future viability based on its ongoing business activities.
This issue came to light through the auditor's opinion, published on the Dhaka Stock Exchange (DSE) website on Monday following a review of KPCL financial report for the year ending on June 30.
KPCL stated in Note 1.4 of their FY23 financial report that the Power Purchase Agreement (PPA) between Khulna Power Company Ltd (Unit-Il and Unit-Ill) and Bangladesh Power Development (BPDB) will expire on March 23, 2024.
The company, under the circumstances, has applied to the BPDB to renew the contract for the next five years, which is currently under process, according to the note.
It further stated that the statement of profit or loss and other comprehensive income and statement of cash flows indicate that the company incurred a net loss of Tk 66.45 crore and had negative operating cash flows of Tk 174.80 crore during the year ending on June 30.
According to the auditor, based on such statements in the financial report, these situations indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern.
The company currently has two major plants – KPCL Unit-I1 and Unit-I11 – that have remained idle for 10 months after the expiry of their power purchase agreements with the government in May 2021.
The two plants returned to operation in March 2022, two years after the renewal of the agreement with the government, according to the company's financial statement.
The government extended its power purchase agreement with the company for two more years under the “no power, no pay” policy. As such, the two plants will expire in March 2024.
Earlier in April 2022, KPCL had agreed with US-based firm Excelerate Global Operations LLC to sell its 110 MW barge-mounted power plant for $1.45 crore. Later in July 2022, it sold the plant for $1.32 crore, show KPCL data.
The residual amount was shown as receivable, which was under discussion for recovery, the power producer's FY23 financial report stated.
When contacted, Mozammel Hossain, company secretary of KPCL, declined to comment on the matter.
The company owns a 35 per cent stake in its sister concern United Payra Power's 150MW plant.
The board of directors of United Payra Power Ltd, a company where KPCL has a 35 per cent stake, declared a cash dividend of Tk 2 against per share with a face value of Tk 10 each on October 18, 2023.
Thus, KPCL will be receiving a dividend totaling Tk 23.17 crore from this associate firm for the year ending in June 2023.
Previously, KPCL earned Tk 31.28 crore as the mean of dividend from United Payra Power Limited for the year ended in June 2022. KPCL shares which have a face value of Tk 10 each, and closed at Tk 26.60 per share on the Dhaka Stock Exchange (DSE) on Monday.
