Forex volatility, fall in profit margin results in Tk195cr loss for Desco in first half of FY23-24
In the October-December quarter, however, it incurred a loss of Tk43 crore, which was Tk3 crore in the same quarter, a year ago.
Amid fluctuations in foreign exchange rates and a significant decline in profit margins, state-owned Dhaka Electric Supply Company (Desco) faced financial challenges during the first half of the fiscal 2023-24.
A substantial loss of Tk195 crore was reported in the six months to December last year, according to the company's half-yearly financial statement unveiled at a meeting on Saturday.
The price-sensitive statement reveals that the bulk tariff, the price at which Desco buys electricity, increased by 28.08%, but the retail tariff, at which Desco sells it, rose by only 15.76%. The disparity between the buying and selling prices contributed to compounding the loss.
According to company sources, the bulk price increased by 8% in January 2023, following the previous increase of 20% in November 2022. Whereas, the retail price has increased by just 15.76% in three phases over the period of time.
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Desco purchases electricity entirely from the Bangladesh Power Development Board at the rate of nearly Tk8.25 per kWh, effective February 2023, an increase from around Tk6.45.
Md Kausar Ameer Ali, managing director at Desco, told The Business Standard that the bulk price has increased by more than 28% in two phases, but the price at the consumer level has not increased in the same way.
"If the retail price is increased by at least an additional 7%, the losses will come down," he added.
Earlier, six state-owned power distributor companies, including Desco, recommended raising the retail tariffs by about 20% in order to maintain profits in this situation.
Nevertheless, leveraging the heightened consumption by consumers, Desco achieved a remarkable 25% growth in revenue during the initial half of the current fiscal year, showcasing a substantial increase compared to the corresponding period in the previous year.
At the end of the July-December period of FY24, its revenue stood at Tk3,335 crore, which was Tk2,656 crore a year ago at the same time.
In the last fiscal year, Desco reported a loss of Tk541 crore, marking the first annual loss in its history. The company attributes the lion's share of this loss to the depreciation of the taka against the dollar, as Desco holds Tk2,900 crore in foreign loans. Additionally, Tk113 crore in losses is attributed to the difference between the purchase and sale prices of electricity.
Despite substantial losses, Desco recommended a 10% cash dividend for FY23.
Desco supplies electricity to most parts of the Dhaka North City Corporation.
On 30 June 2023, the number of customers was 12.40 lakh. During the year, the company added 82,650 new customers, registering a growth rate of 7.14% in the customer base.
Among them, around 91% of users are from the household level, 7% are from commercial and industrial levels, and other consumers make up the remaining 2%.
