Bangladesh’s economy grapples with sustained high inflation, increased interest rates, and substantial devaluation of the local currency. In the latest review of fiscal year 2022-23, we examine the impact on listed power generation companies.

Listed power producers witnessed declining profits, attributed to the devaluation of the local currency and a reduction in the capacity charge during FY 2022-23. Out of eight companies reporting financials, one incurred deeper losses, two experienced fresh losses, and three saw reduced profits.

United Power Generation stood out with an 18 % higher profit of Tk 13.33 billion. However, this increase is primarily due to profits from its new subsidiaries, masking potential drops in United Power Generation’s core profits.

Power generation companies faced profit declines due to the ripple effects of currency devaluation and heightened interest costs, according to Humayun Rashid, the MD and CEO of Energypac Power Generation PLC.

Energypac incurred a loss of Tk 560 million in FY23, compared to a Tk 70 million loss the previous year. The company’s turnover dropped from Tk 20.33 billion in FY 2021-22 to Tk 8 billion in the latest fiscal year.

The import cost of crucial raw materials, like fuel, increased due to the higher US dollar price. Additionally, sporadic taka devaluation led to higher payments for raw material importers, resulting in significant foreign exchange losses. Delays in government payments added extra interest costs for most power companies.

The combined finance costs of listed power companies rose 20 % year-on-year to Tk 6.69 billion in FY 2022-23. Their collective foreign exchange loss surged 142 % to Tk 15.78 billion, as per the financial statements.

Changes in contract conditions and lower capacity charges further impacted some companies. Summit Power, for example, faced altered payment terms with the Bangladesh Rural Electrification Board, affecting its three power plants.

Despite Power Grid’s 4 % increase in turnover to Tk 24.40 billion, it reported a loss of Tk 6.26 billion. Doreen Power’s turnover rose by 22 % to Tk 18.42 billion, but profits plummeted by 61 % to Tk 640 million.