Power Grid takes big hit from dollar volatility
Fluctuations in foreign currency exchange rates have dragged profits of the Power Grid Company of Bangladesh (PGCB) Ltd – the only state-owned power transmission firm in the country – down to a five-year low.
The company underwent a difficult time as its servicing cost of foreign loans from the country's development partners has skyrocketed owing to the strong dollar.
Company Secretary Md Jahangir Azad told The Business Standard that for development work, the company has taken loans from Bangladesh's development partners at various times.
"According to the current exchange rate of the taka against the dollar, this loan amount is much higher than what it was last year. As a result, there has been a huge loss due to fluctuations in foreign currency exchange rates," he added.
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According to its fiscal 2021-22 financials, the company's losses caused by volatile exchange rates increased by 967% to Tk535.79 crore.
As a result, despite a 29% growth in operational profit, its net profit declined by 61.68% to Tk122.61 crore – the lowest since fiscal 2016-17.
Among listed government firms, the Power Grid Company – a subsidiary of the Bangladesh Power Development Board (BPDB) – was earlier able to keep consistency in profits as it enjoys a monopoly in the business.
In FY22, the company has snapped its upward trend in profit since fiscal 2014-15.
In July 2021, the dollar exchange rate was Tk84.82 but it started rising in May this year. In that month, the price in the open market exceeded Tk100 per dollar.
The government has been funding the Power Grid from various development partners and the government's own funds with the aim of building the country's power transmission infrastructure.
The money paid to the company by the government is 60% equity and 40% debt. The BPDB owns 75% of the company.
Md Belayet Hossain, general manager (Finance) at the Power Grid, said the company has loans from the government and donor organisations amounting to around Tk25,000-30,000 crore on various terms.
The company has announced a 10% less dividend than the previous year when the company paid a 20% cash dividend due to good profitability with business growth.
Power transmission revenue grew by 6.88%
The Power Grid Company is responsible for the power transmission of the BPDB.
In order to continue the progress of the country's development, it has been building new power transmission lines and substations as well as transmission infrastructure since 2000 in line with electricity generation.
Its source of income is transmission charges. Income increased with the increase in the construction of new transmission lines in the last year.
Its revenue rose by 6.88% to Tk2,336.26 crore in FY22.
According to the financials, despite the increase in revenue, its profit has decreased drastically due to finance expenses and foreign exchange rate fluctuations.
The company's finance expense increased by 120% to Tk981.58 crore, which was Tk444.54 crore a year ago.
The Power Grid was incorporated in 1996 as a fully BPDB-owned subsidiary company.
It got listed on local stock exchanges in 2006 by offloading its 15.36% shares.
Profit falls 20% in the first quarter too
Although revenue grew by 7.6%, its profit fell by 20% in the first quarter of this fiscal year too.
Revenue increased to Tk691 crore while the profit declined to Tk104 crore compared to Tk130 crore in the corresponding period of the previous year.
Foreign exchange loss increased to Tk153.16 crore, which was Tk38.16 crore in the same period a year ago.
