12 fuel, power companies see profit rise
Twelve out of the country's 22 listed fuel and power companies saw profits increase year-on-year in the first nine months of the ongoing fiscal year thanks to the rebounding of the economy.
The United Power Generation & Distribution Company logged the highest, Tk 859 crore, followed by Summit Power, Power Grid Company of Bangladesh, and Titas Gas Transmission & Distribution Company, between July 2020 and March 2021, according to their financial reports.
For Summit Power, it was a rise of over 2 per cent to Tk 445 crore.
Explaining the increase, Abdul Wadud, managing director of Summit Power, the country's largest independent power producer, highlighted that from early 2020 international prices of liquefied natural gas (LNG) had been increasing almost continuously.
The country also had occasional shortages of gas supply. Consequently, there was increased demand for power, especially from the company's heavy fuel oil-based power plants, he said.
Despite the Covid-19 pandemic, the company managed to keep all its plants available for operation at full capacity as per increased national demand, he added.
"Their profits rose thanks to a higher power demand after the main blow of the pandemic," said Mohammed Monirul Islam, chief financial officer of Baraka Patenga Power, whose profits rose 20 per cent to Tk 50 crore.
"The way electricity consumption has risen shows that the economy bounced back," Islam said, adding that the Baraka's four power plants have been in full production since last April.
At present, Bangladesh has a power generation capacity of 22,023 megawatts (MW), over 50 per cent of which is of the private sector.
Listed power companies have 35 plants, of which 21 are gas-based while the rest heavy fuel oil.
Yesterday power generation peaked at 9,409 MW during the day and 11,276 MW at night, shows Bangladesh Power Development Board data. On the same date in 2019, it was 9,641 MW and 12,063 MW respectively.
When the general leave aimed at curbing the spread of Covid-19 was imposed in March 2020, power generation was almost shut down.
"So, that quarter was the worst for all fuel and power companies but the situation changed in July," Islam said.
Market capitalisation of the fuel and power sector at Dhaka Stock Exchange (DSE) is now Tk 46,866 crore, which was 9.15 per cent of its total.
It was Tk 42,775 crore last November.
"Since Bangladesh is a developing country, local fuel and power companies have the potential to grow in upcoming years," said Mir Ariful Islam, chief executive officer and managing director of Sandhani Asset Management.
However, the present demand for power is lower than what the government expects due to the ongoing pandemic, among other reasons.
"The real challenge for power companies comes when they cannot sell power," he said, adding that however some plants did get paid solely for the capacity they kept available for use.
However, others are unable to profit due to low demand.
"This is a vital challenge for them and besides, we don't know the government's policy on when the Rampal nuclear power plant will be activated. That is another challenge," Islam said.
Regarding fuel companies, the managing director said state-run companies have huge deposits in banks which had an impact for the lower interest rate regime in the banking sector.
Among lubricant makers, newly listed Lub-rref (Bangladesh) saw profits rise 20 per cent to Tk 50 crore.
"Thanks to the rebounding of economic activities in the current fiscal year, the fuel and power sector is enjoying higher profits now," said Mofijur Rahman, chief financial officer of Lub-rref Bangladesh.
However, sales growth in the year is still low, between 3 per cent and 4 per cent, he said, adding that the growth was 15 to 16 per cent in previous years.
As all industrial activities had been impacted during the pandemic, the amount of lubricant on demand was low, he added.