Doreen Power's two plants shut down on contract expiry
Publicly listed Doreen Power Generations and Systems has pulled the shutters on its 22MW Narsingdi power plant because of the expiry of its power purchase agreement (PPA) with the Bangladesh Rural Electrification Board (BREB), the power producer stated in a stock exchange filing on Tuesday.
Last month, the company had to shut down its 22 MW Tangail power plant due to expiry of PPA with the Bangladesh Power Development Board (BPDB).
Both the plants kicked off commercial operations in 2008, and signed an agreement for 15 years to sell electricity to the government.
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Now, the PPA of Doreen Power's remaining power plant in Feni is scheduled to expire in February 2024.
Earlier, the independent auditor of Doreen Power raised a red flag as all three power plants of the company are set to close within February next year because of contract expiry.
ACNABIN Chartered Accountants, auditor of the publicly listed power producer, expressed its concerns as emphasis of matter in the audited financial report of Doreen Power for the fiscal 2022-23.
The shuttered down condition of the power plants will continue until further instructions from the BPDB or the ministry of power, energy and mineral resources.
The company had applied for an extension of the contract, the disclosure reads.
Doreen Power has three subsidiaries that have a combined production capacity of 225 MW, where Doreen Power has nearly 100% stake.
According to its FY23 financials, 9.62% of Doreen Power's consolidated revenue and 23% of its consolidated profit came from its three power plants.
In FY23, Doreen Power's consolidated profit fell 61% year-on-year to Tk64.48 crore owing to foreign exchange losses.
The company has recommended an 11% cash dividend for FY23.
Power companies open letters of credit for importing heavy-fuel oil, a fundamental raw material for power plants, at the prevailing dollar rate.
However, they must settle the import bills at a higher rate due to the continued appreciation of the greenback, resulting in exchange losses for these companies, according to an industry insider.
The company's shares closed at Tk61 each at the Dhaka Stock Exchange on Tuesday.
