Load shedding, high operational costs eat into United Power's profit

The United Power Generation and Distribution Company experienced a 28.13% year-on-year profit decrease in the second quarter of the current fiscal year due to scheduled load shedding, the appreciation of the dollar, and increased operational costs.

In the October-December quarter, its consolidated net profit came down to Tk289.59 crore compared to Tk402.93 crore in the same period of the previous fiscal year.

The consolidated earnings per share stood at Tk4.84, down from Tk6.85 a year ago.

The revenue of the company, which is listed on the stock market, dropped by 14.65%. Its consolidated revenue stood at Tk1,041.11 crore, which was Tk1,219.79 crore in the same quarter of the previous fiscal year.

According to Md Mujibul Islam Patwary, an assistant general manager of the company, its power generation had dropped as the government purchased power from them in lesser quantities because of its scheduled load shedding policy in that quarter.

He said the import cost of heavy fuel oil (HFO), which is used in their power plants as fuel, rose significantly due to rising dollar rates.

He said the company is used to receiving a considerable sum in dividends from its subsidiaries, but the same thing did not happen in the said quarter due to a decline in their business too.

Besides, the government's decision to increase gas prices will also hit the company's business, he added.

United Power's two units incur losses

The United Power Generation and Distribution Company, which has been supplying electricity to the Dhaka Export Processing Zone and the Chattogram Export Processing Zone since 2007, has now found itself in a difficult position over a change in gas prices.

The company used to get gas at a price set for independent power producers until 2018, when the government changed its policy and set a new price for energy for plants supplying power to export processing zones.

The rate for the captive power plants has been raised to such an extent that the cost of power production has gone beyond their selling prices, according to the company.

As a result, the company is facing significant losses from its two power plants supplying electricity to the export processing zones.

For example, Md Mujibul Islam Patwary said those power plants produce 3-unit power by using one cubic metre of gas that costs around Tk33, but the company only gets Tk27 by selling the power to the government.

Besides, operation, distribution, and other expenses also hit the cost of production. In this situation, the company has informed relevant authorities, including the Bangladesh Export Processing Zones Authority (Bepza), to resolve the issue through discussions.

If the company does not get any resolution in this matter, then there is no way to continue production at the two power plants, he added.

United Power, which has a paid-up capital of Tk579.69 crore, paid 170% cash dividends to its shareholders for the fiscal 2021-22.

As of 31 December 2022, sponsors and directors held 90% of the company's shares, and institutional, foreign, and general investors owned 7.35%, 0.02%, and 2.63%, respectively.

The last share trading price of the company was Tk233.70 on the Dhaka Stock Exchange on Monday.