The Khulna Power Company Limited has decided to sell its first electricity plant in the next one year.
The company has set the price of the 110-Mega Watt (MW) unit -- the first privately financed power plant to go into commercial production in Bangladesh -- at Tk334 crore.
The company has made the decision in its latest board meeting.
The United Energy and Summit Corporation jointly established the Khulna Power Company Limited which has three electricity units. Among these, the KPCL-1 has a capacity to generate 110MW electricity, KPCL-2 115MW, while KPCL-3 has a capacity to produce 40MW electricity.
The dual fuel-fired KPCL-1 went into commercial production on October 13 in 1998 with a 15-year contract with the Bangladesh Power Development Board. The contract got another 5-year extension on October 12 in 2013.
The unit was shut down on October 13, 2018 as it expired the extended period of the contract. Though the Khulna Power sought another extension, the Power Development Board turned down the application.
The company constructed the power plant in 1997 with a cost of Tk534 crore. The carrying value of the unit stood at Tk217 crore after deducting the accumulated depreciation of Tk315 crore.
However, the Khulna Power is asking for Tk334 crore for the 20-year old plant.
Chief Financial Officer of the company Sohrab Ali Khan told The Business Standard they are looking for buyers from Myanmar, Kenya, Libya or Sri Lanka.
"Those countries have growing demands for electricity. Investors of the countries are interested in buying old machineries at a cheaper cost," he explained.
The share price of the Khulna Power Limited at the Dhaka Stock Exchange 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.
On Wednesday, the closing price of Khulna Power was Tk48.10 at the Dhaka Stock Exchange.
Some market experts argued that the share price of the company was hiked through market manipulation in 2018. Summit Power, the corporate sponsor of the company, announced to sell the unit that year.
The Bangladesh Securities and Exchange Commission then responded to the declaration by slapping a ban on share sale by the sponsors and directors of the Khulna Power Company Limited.
The United Energy Limited, Summit Power and Summit Corporation respectively hold 35.28 percent, 17.64 and 17.64 percent share of the power company.
The Khulna Power Company will no longer be in business after June 2021 as its other two electricity generating units will expire by that time. Those units began commercial production in 2011.
Meantime, Power Division sources wishing anonymity said the government is not likely to grant further extension to the private electricity generators established under the Power Purchase Agreement.
"Those who have invested in this sector have got back their money with handsome profit," commented the sources.