Heavy fuel oil import duty pushes up Doreen Power’s business costs

Import duty on heavy fuel oil – a basic raw material for power plants – has pushed up the business cost of Doreen Power Generations and Systems by 51% in the first half of fiscal 2021-2022 from a year earlier.

In the July-December period, its profit grew by 26%, which is way below compared to the consolidated revenue growth of 42%.

In fiscal 2020-21, the government imposed a 15% duty on the import of heavy fuel oil used for power generation.

In its financial statements, the independent power producer said the cost of production has increased because of the imposition of duties on heavy fuel oil import which was not applicable in the previous fiscal year.

It also explained in its financial statements how the company maintained the growth.

The report read that profit increased considerably, riding on a significant rise in revenue of two subsidiaries and a significant decrease in finance cost of the group for a reduction in outstanding loans and interest rates.

At the end of the first half of FY22, Doreen Power's consolidated revenue stood at Tk463.59 crore, net profit Tk79 crore, and earnings per share (EPS) Tk4.86.

Doreen Power operates three power plants with a 22-megawatt capacity each in Tangail, Feni, and Narsingdi. The plants will expire in 2023.

It also has two subsidiaries – Dhaka Southern Power Generation and Dhaka Northern Power Generation – with 55-megawatt capacity each, where Doreen Power owns more than 99% stakes. The subsidiaries have been in commercial operation since 2016.

Doreen has also received approval from the Bangladesh Power Development Board in 2019 to set up a power plant with a capacity of 115 megawatt for 15 years.

It is constructing the plant under its subsidiary named Chandpur Power Generation Ltd in which Doreen holds 99.9% shares.

Officials at the company said they could not set up the plant in time owing to the Covid-19 pandemic.

Doreen Power got listed on the capital market in 2016. It had paid 13% cash and 12% stock dividends to the shareholders for FY21.

Its shares traded at Tk75.3 each on Thursday at the Dhaka Stock Exchange.