2 more plants of Khulna Power to close in 2021

The country's first private power company Khulna Power Company Ltd's business is under pressure now. 

The contracts of two more power plants of the company that began commercial production in 2011 will expire after June 2021. 

The contracts of KPCL-2 and KPCL-3 – with a capacity of 115MW and 40MW respectively – will expire on June 1 and May 29 of 2021.

The government is unlikely to extend the contract of the private electricity generators, set-up under a power purchase agreement, Power Division sources said.

Those who invested in this sector made a good profit, they claimed. However, Khulna Power officials refused to comment on the issue.

Earlier, the company decided to sell its first power plant KPCL-1 as its contract with the Bangladesh Power Development Board expired on October 13, 2018.

Khulna Power set the price of the 110MW unit – the first privately financed power plant to go into commercial production in Bangladesh – at Tk334 crore.

United Group, one of the main corporate sponsors of the company, came to its rescue, selling 35 percent share worth Tk115.88 crore of its United Payra Power Plant to Khulna Power.

United Payra Power Plant has a production capacity of 150MW and is expected to go into commercial production from November 21, 2020.

Meanwhile, in the first three quarters of the 2019-20 financial year, Khulna Power's revenue fell by 40 percent to Tk389.13 crore. 

During this time, its net profit also fell by 15 percent to Tk104.48 crore and earnings per share stood at Tk2.63.

Khulna Power's revenue fell because of the closure of KPCL-1 and lower electricity generation because of drop of demand by the Bangladesh Power Development Board, a company official said.

Khulna Power paid 40 percent cash dividend to its shareholders in the 2018-19 financial year.

The share price of the company at the Dhaka Stock Exchange (DSE) rose to the highest value of Tk139 in October 2018 before KPCL-1 suspended production that year.

The news of the unit's closure dragged down the company's share price to Tk52.50 in just two months, marking a fall of 63 percent.

However, market experts argued that the share price of the company was raised through market manipulation in 2018. 

Summit Power, another corporate sponsor of the company, announced the sale of KPCL-1 that year.

The Bangladesh Securities and Exchange Commission then responded to the declaration by slapping a ban on share sale by the sponsors and directors of Khulna Power.

United Energy Ltd, Summit Power, and Summit Corporation have 35.28 percent, 17.64 percent and 17.64 percent stake respectively in the company.

The closing price of Khulna Power's share at the DSE was Tk45.30 on July 9, 2020.