United Group will sell 35 percent share of the United Payra Power Plant to the KPCL
The Khulna Power Company Limited (KPCL) will invest in the under-construction United Payra Power Plant Limited located in Patuakhali.
The plant has a production capacity of 150 megawatts. The Bangladesh Power Development Board will buy electricity from this plant for fifteen years. In this connection, a bilateral agreement was signed on August 28.
The United Payra Power is planning to start commercial production of the plant from November 21, 2020, with a cost of $110 million.
As the news of investment broke on Thursday, the KPCL's share at the Dhaka Stock Exchange (DSE) rose by 10 percent and halted. At that time, the company had share buyers but no sellers.
KPCL Company Secretary Md Shoharab Ali Khan told The Business Standard that they will buy 35 percent of United Payra Power's shares from the United Group, but the price has not been finalized yet.
KPCL then and now
The KPCL began its journey as the country's first private independent power producer in 1997.
The company's 110MW KPCL-1 power station, located in Khalishpur of Khulna, expired on October 12, 2018.
Although the KPCL made an application to extend the tenure of the plant, there has been no response from the government so far. So, the company is looking for interested buyers to sell the plant at Tk334 crore.
Also, the KPCL-2 with a capacity of 115MW will expire on June 1, 2021, and the 40MW KPCL-3 located in Noapara of Jashore will expire on 29 May 2021.
The expiry of the two plants in the next two years has put the KPCL under pressure. So one of the main corporate sponsors of the company, the United Group, has come to its rescue, selling 35 percent share of its United Payra Power Plant to the KPCL.
The KPCL's net profit fell by 38 percent in fiscal year 2018-19 as the KPCL-1 went out of production. At that time, the company's net profit stood at Tk139 crore and its earnings per share (EPS) was Tk3.50. In the previous fiscal year, its net profit was Tk223 crore and the EPS was Tk6.18
The KPCL paid 40 percent in cash dividend to its shareholders in the last fiscal year.
As the company's 110MW plant has been shut down, its profit has fallen.
For this reason, in the first quarter of the current fiscal year (July-September), the company's net profit fell by 20 percent to Tk44 crore and the EPS was Tk1.11. The net profit was Tk55 crore and the EPS was Tk1.53 during the same period of the previous year.
The share price of the KPCL at the DSE edged up to the highest Tk139 with a 158 percent leap in five months in 2018 – before the unit suspended its production in October that year.
The news of the unit's closure dragged down the company's share price to Tk52.50 in just two months later, a fall by 63 percent.
The KPCL's share price rose by 10 percent on Thursday at the DSE and traded at Tk43 last. The lowest and highest price of the KPCL's share in the last one year were Tk34.90 and Tk73.50 respectively.
The company was listed with the share market in 2010. At present, its authorised capital is Tk700 crore and the paid-up capital is Tk397 crore.
The KPCL has Tk573 crore in its reserve.
Corporate sponsor United Mymensingh Power Limited has 35.28 percent stake in the KPCL while Summit Power Limited and Summit Corporation Limited hold 17.64 percent and 17.04 percent share respectively.