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Desco suffers weighty loss as bulk power tariff hike bites earnings

Staff Correspondent
23 May 2023 03:53:11 | Update: 23 May 2023 09:29:05
Desco suffers weighty loss as bulk power tariff hike bites earnings

The staggering surge in the bulk electricity price has caused an ominous effect for state-run power supplier Dhaka Electric Supply Company Ltd (Desco), as the company reported a huge loss at the end of the first three quarters of the current fiscal year.

The listed power company incurred a net loss of Tk 137 crore in the first nine months of the fiscal year 2022-23, against a profit of Tk 24 crore in the corresponding period last fiscal.

The Bangladesh Energy Regulatory Commission (BERC) late last year had increased the bulk price of electricity by 19.92 per cent, from Tk 5.17 to Tk 6.20 per unit, with effect from December 2022.

As a result, the state-owned firm now has to purchase electricity from the Bangladesh Power Development Board (BPDB) at higher costs, but it supplies electricity to retail users at the previously set lower prices.

As per its unaudited third quarterly financial report, the power supplier’s total operating revenue fell to Tk 295 crore in the July-March period of FY23 from Tk 503 crore in the same period last fiscal year.

The state-owned power supplier incurred a massive loss of Tk 144.43 crore in the January-March quarter of FY23. It, however, in the previous two quarters, had made a profit of Tk 7.73 crore. As a result, at the end of the third quarter, the company’s cashbook represented a net loss of Tk 137 crore.

Desco reported a per-share loss of Tk 3.44 for the July-March period of the current fiscal year, against earnings per share (EPS) of Tk 0.56 for the same period a year ago.

The company’s earnings per share for the January-March quarter of FY23 was Tk 3.65 negative, against earnings per share of Tk 0.05 for the same quarter of FY22.

The company’s consolidated net operating cash flow per share (NOCFPS) was Tk 1.75 for July 2022-March 2023 against Tk 7.21 for July 2021-March 2022.

The NOCFPS decreased in the first three quarters of the ongoing fiscal due to an increase in interest payments, employee expenses, and other operating incomes, the company said.

Its consolidated net asset value per share was Tk 62.45 as on March 31, 2023, which was Tk 65.96 till June 30 last year.

Desco officials said after the increase in the bulk power price, the company plunged into losses as the retail price was not increased at the pace of the bulk price.

They believe that if this situation continues, the company's losses will be getting mounted in the upcoming quarters.

The last power tariffs, both at retail and bulk levels, were raised on March 1, 2020.

Desco’s net profit saw a 14.50 per cent decline in FY22. The power supplier reported earnings per share of Tk 1.59 for 2021–22, down from Tk 1.86 recorded during the previous financial year of 2020–21.

The company paid a 10 per cent cash dividend to its shareholders for the last financial year.

The company in FY21, made a profit of Tk 73.91 crore and its EPS was Tk 1.86, compared to the profit of Tk 45.56 crore and the EPS of Tk 1.15 in FY20.

Starting commercial operation in 1998, the company got listed on the stock exchanges in 2006. The power sector company belongs to category ‘A’ of the country’s prime bourse Dhaka Stock Exchange (DSE).

The company’s paid-up capital is Tk 397 crore. Desco distributes electricity to the northern parts of Dhaka City.

The government owns a 67.66 per cent stake in the the company, while institutional investors own 23.83 per cent of the company’s shares, foreigners represent 0.5 percent, and the general public 8.46 per cent.

Desco shares closed at Tk 36.60 per share on the trading floor of the DSE on Monday.