Internal conflict leaves lone prepaid meter maker out of production for a year

• Bangladesh Smart Electrical Company Limited was established in 2018 with a paid-up capital of Tk28 crore
• The facility has a capacity to produce maximum 50,000 meter monthly 
• Since establishment, it supplied 1.90 lakh meters to two companies 
• Company remains out of production over internal conflict

At a time when there is a huge demand for smart prepaid meters from utility service providers, Bangladesh Smart Electrical Company Limited, the country's maiden prepaid meter manufacturer, has remained out of operation for the last one year because of an internal conflict.

The idle factory is now counting losses as it is having to pay staffers salaries and bearing depreciation costs of capital machinery.

Officials concerned said the company's present situation is a result of internal and external conspiracies, which are almost resolved.

They are hopeful of resuming production at the factory soon, they noted. 

Md Hafizul Bari, newly appointed managing director at the company, said they are working to resume production. 

"We are working to secure new work orders and expecting it very soon," he said. 

Bangladesh Smart Electrical Company Limited, a Joint venture company of West Zone Power Distribution Company Limited and Chinese multinational company Hexing Electrical Company Limited, was formed in 2018 to supply smart prepaid meter to power and gas distribution companies at a cost competitive rate to meet the government's plan to introduce smart prepayment meters all over the country. 

A factory was set up in Khulna with a paid-up capital of Tk28 crore, of which West Zone Power Distribution Company Limited owns a 51% share, while Hexing Electrical Company Limited owns the remaining 49%. 

The factory has a capacity to produce around 40,000 to 50,000 meters per month. 

After having gone into operation, the company signed two separate contracts with the West zone power Distribution Company Ltd and Dhaka Power Distribution Company to provide them with 1.90 lakh prepaid meters and completed the projects. 

At present, the country has 4.21 crore electricity consumers, of which only 46.77 lakh have been given prepaid meters.  

In addition, the Energy Division of the Ministry of Power, Energy and Mineral Resources decided to install 25 lakh prepaid meters for gas consumers. 

Therefore, the demand for digital meters is gradually increasing as the utility companies strive to replace analogue meters for the rest of the consumers.  

Since last year, the prepaid meter manufacturing company has not secured any contracts and it has remained idle. 

Until August 2021 since its inception, the company had been led by Engr Shafique Uddin who was also the managing director of the West Zone Power Distribution Company Limited. 

How the standoff began 

The impasse began when the founding managing director retired from the post of both West Zone Power Distribution Company and Bangladesh Smart Electrical Company Limited, and Ratan Kumar Debnath, executive director (Finance) at the prepaid meter producing company, was nominated as the acting managing director. 

Instead of any effort to secure meter supplying contracts, Ratan Kumar Debnath started to find financial anomalies of the previous management. 

Company insiders said Ratan Kumar with fellow colleagues made an audit report that claimed that Tk30.26 crores had been smuggled through a letter of credit to Chinese Hexing Electrical Company Ltd, which is also a stakeholder of the company.

Sources at the West Zone Power Distribution Company said the audit was done without approval from the company's board and without following Section 87(2) of the Companies Act, and Joint venture Agreement and Articles of Association. 

"The committee has been formed without any member from the joint venture company as per the company's Article of Association and without any internal discussions and chance for giving clarifications," they said.

When asked, Ratan Kumar Debnath said, "The audit was conducted when we found some suspicious money transactions in the name of meter supplying contracts."

Engr Md Azharul Islam, managing director at West Zone Power Distribution Company that owns 51% stake in the company, told The Business Standard that the audit was not conducted through proper process. 

"Therefore, we have decided to conduct a third party audit to check if there are any anomalies in the financial governance of the company," he said.