KPCL plans solar plant to regain profitability

Khulna Power Company Ltd (KPCL), a company listed in the capital market under fuel and power sector, plans to set up a 30MW solar power plant in a bid to return to profitability. KPCL has already purchased 100 acres of land in Pakundia of Gazipur for this project.

Company sources say KPCL made an application to the government on November 30 last year, seeking approval to set up the solar plant. The company had reported a net loss of Tk 66 crore in FY23, whereas the profit for FY22 was Tk 1.30 crore.

KPCL currently has two major plants – KPCL Unit-II and Unit-III – that have remained idle for ten 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 government agreement, 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, agreements with the two plants are set to expire in March 2024.

As a result, the company has to rely on its subsidiary, United Payra Power, for its income. From which the annual income of the company is about Tk 25 crore to Tk 35 crore.

HM Nuruzzaman Miah, chief financial officer of KPCL, told The Business Post, “That is why we are moving towards solar power plants, so that we do not have to depend on subsidiaries for income.

“Due to the high value of the USD, the import of solar plant parts is somewhat slow. However, all efforts are being made to speed up the work. Since we have a contract with United Payra Power, there is no possibility of a sudden stoppage of income. Because this plant has a 15-year tenure, and only 2 years have passed.”

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.

In March this year, two of the company's power plants are once again expiring. There are doubts among the stock market investors about whether they will get approval again after the expiration of this period.

In response to such a question, HM Nuruzzaman Miah said, “Since the government is not giving us capacity charges now, it is only giving money when we purchase electricity. Therefore, there is no reason for the government not to approve these plants.

“For the last few years, we have not been getting what we get from the government on time. As a result, our income after expenditure is not showing up. We owe Tk 285 crore to the government from June to November 2023. Of the figure, only Tk 15 crore was paid recently, and Tk 270 crore is still due.”

Recently, the auditor, after reviewing the FY23 financial statement of Khulna Power Company Ltd (KPCL) – the country's first independent power producer – expressed doubts about the company's future viability based on its ongoing business activities.

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.

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.

KPCL shares, which have a face value of Tk 10 each, closed at Tk 26.60 per share on the Dhaka Stock Exchange (DSE) on Wednesday.