GBB Power plant to expire in June, investors dump shares
GBB Power Limited's auditor expressed concern about the company's ability to survive after the contract expiry of its sole power plant in June, prompting a share selloff.
But due to the floor price set by the Bangladesh Securities and Exchange Commission (BSEC), there are not enough buyers for these shares.
According to Dhaka Stock Exchange (DSE) sources, the company's shares began to decline in September 2021. At that time, each share was priced at Tk50.
From there, the shares fell by 60% to Tk19.8 at the floor price set in October last year. Then, the BSEC lifted the floor on the company's shares and set the lower circuit breaker at 1%. Since then, the share price has fallen by 1% daily for 38 consecutive sessions.
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In its financial report for the fiscal 2021-22, auditor Kazi Zahir Khan and Co said that GBB Power's power purchase agreement (PPA) with the Bangladesh Power Development Board (BPDB) will expire on June 17 this year. So, its power plant will no longer be in production after that.
The company, meanwhile, informed the auditor that it was working to get the contract extended. However, the company could not tell the auditor anything for sure to this end. In such a situation, the auditor expressed doubts about the company's survival after June.
GBB Power Chairman Shamim Ara Islam did not answer a call on her mobile phone for comments. Also, the company's director Taifur Hossain rejected a call from this correspondent on his mobile phone.
When contacted, Company Secretary Mohammad Sattar Hossain said, "The management will decide how to sustain the business. I have no comment on this."
Market analysts say the company was listed on the stock market with just one power plant. So its shares were not very profitable for investors from the beginning. Therefore, approval for the listing of private sector power companies should be given more carefully.
Established in 2006, GBB Power entered into a joint venture agreement with Caledonian Power Limited to set up a power plant. The joint venture entered into a PPA agreement with BPDB for 15 years. Under this agreement, a 20MW power plant was set up in Bogura, and its commercial operation started in 2008. This subsidiary of GBB Group was listed on the stock market in 2012.
According to company sources, GBB Power tried to get approval for the construction of some more power plants, but to no avail.
Company sources also said that GBB Group formed a company named GBB Tea Estate after failing to get new power projects. GBB Power owns 49% of the tea company. For this, the company has invested Tk9 crore. And with this money, two tea gardens have also been purchased in Panchagarh. Although the tea company was established in 2019, there is still no income from it.
Besides, GBB Power has an investment of Tk7 crore in the stock market and a fixed deposit of Tk43 crore in banks.
Apart from GBB, another listed power company, Khulna Power, has three power plants that have expired. The company's production was stopped. Later, United Group, which owns the company, gave a share of one of their power plants to Khulna Power. Currently, the company is running on the income from that power plant.
