The Bangladesh Securities and Exchange Commission (BSEC) has recommended to extend the Power Purchasing Agreement (PPA) of the government from listed power generating companies. In addition to the written recommendation, the chairman of the capital market regulator BSEC is discussing the matter with government policymakers.
However, it is difficult to say how successful this effort will be due to the huge surplus of electricity in the country and the new policy position of the government.
Important to mention, PPA of many units of several of the listed electricity companies is coming to an end. Among them, Khulna Power Company Limited (KPCL), the country’s first private power company, has agreed to sell power to the government (PPA) from two plants in May this year. Although the PPA of the first unit o
f the company expired in 2016, the government has not renewed its contract. The possibility of renewing the PPA of the two units discussed in the normal process is also very low. If the PPA of the two units is not renewed, even if the company produces electricity, the government will not buy it. According to the current policy, there is no opportunity to sell this electricity outside. So the company will virtually go to the brink of closure. This could greatly hurt a section of market investors.
In the face of the uncertainty of KPCL’s future, in the interest of investors, BSEC sent a letter to the Secretary, Power, Ministry of Power, Energy and Mineral Resources on April 15 recommending extension of the two plants mentioned by the company.
However, no decision has been taken yet, according to sources in the Ministry of Power, Energy and Mineral Resources.
As part of the master plan for the power sector, various types of power companies have been conducting their business by raising capital from the capital market at different times, the letter said. All these companies have investments from general investors including institutional investors in Bangladesh. Of these, two companies owned by Khulna Power Company are supplying electricity to Khulna Power Company Unit-2 and Khanjahan Ali Power Company by increasing the PPA of the government or Beauvoir. The term will end on May 31 and May 26 of this year.
In this situation, the money invested by the general investors in Khulna Power Company has not been fully recovered from the dividend till now. The commission is concerned about the future of the company in protecting the interests of investors. Therefore, the commission has requested that the PPA contracts of other listed companies, including KPCL, be renewed in the interest of investors.
Mohammad Rezaul Karim, executive director and spokesperson of BSEC, confirmed the matter to the Finance Minister and said that the commission has taken this initiative in the interest of the market and investors.