KPCL to shut down two power plants

Khulna Power Company Ltd (KPCL)—the country’s first rental private power plant (PPP) company—has said it will shut down its two plants that began operation 10 years ago as the power purchase agreement with the government is set to end by this month.

‘The tenure of the existing power purchase agreement (PPA) of KPC Unit-2 and Noapara Plant – with a capacity of 115MW and 40MW respectively – will expire on May 31 and May 29 this year,” said the company in a filing with the Dhaka Stock Exchange on Sunday.

The Bangladesh Power Development Board (BPDB) has already instructed the KPCL to shut down the power plants between June 1, 2021, and May 29, 2021, respectively.

“But the persuasion for renewal of PPAs for the power plants is ongoing,” said the KPCL.

However, the government already decided not to extend the PPA and to shut down all rental and quick rental power plants by 2024.

“The government has allowed rental power plants on a short-term basis. Now their owners are pursuing long-term agreements, which cannot be accepted in any case,” said BPDB Chairman Belayet Hossain in a recent webinar.

He said the government still has to purchase electricity at a much higher rate from the private power producers and sell it to the consumers at a lower rate, incurring huge financial losses for the BPDB.

This creates a huge gap of Tk1.60 per unit between the BPDB’s average generation cost and electricity supply to the consumers, he noted, adding that the government had to provide Tk7,000-8,000 crore in the current fiscal year as a subsidy to fill the gap.

On Sunday, its share price fell to Tk 42.2 from the previous session’s Tk 43 on the Dhaka Stock Exchange.

The company reported that its earnings per share in the second quarter (October-December 2020 ) was Tk 0.66, down from Tk 0.85 in the same period a year earlier. It paid a 34% cash dividend for the year ended on June 30, 2020, to the shareholders.

Its EPS fell due to the lower electricity generation in line with the demand of the BPDB, said a company official. United Group is one of the main corporate sponsors of the KPCL.