Listed power firms under pressure amid PPA contract uncertainty
Muhammad Ayub Ali :
A total of 11 power companies are listed on the capital market, but their challenges go beyond weak ratings, raising serious concerns about their business continuity and long-term survival.
Expiring power purchase agreements (PPAs), uncertainty over renewals, plant shutdowns, rising uncollected dues, and potentially overvalued assets all point to a deepening crisis in the sector.
A review of the latest audited financial statements reveals that at least five of these 11 listed power companies face significant “going concern” risks, highlighting the sector’s precarious state.
Market analysts warn that without long-term government purchase agreements, investment in the power sector cannot be sustained.
The Bangladesh Securities and Exchange Commission (BSEC) has acknowledged that contractual and financial uncertainty erodes investor confidence. The regulator has instructed listed companies to ensure accurate disclosures, improve risk management practices and clearly communicate material risks to investors.
Al-Amin, associate professor at the University of Dhaka, said high fuel costs, gas shortages and costly energy transitions make it hard to run plants after PPAs expire, and urged clear disclosure of going-concern risks and price-sensitive contract information.
Power Grid Company shows major irregularities, with unverified assets, capitalised forex losses of Tk4,715cr, and poor debt management, leading to losses over Tk8 per share in 2023 and Tk 5 per share in 2024, placing it in the Z category.
However, Executive Director Md Muniruzzaman said vendor contract issues are being resolved and interest adjustments will be made after verification.
DESCO’s audit shows Tk311 crore of its Tk560 crore receivables are nearly unrecoverable, with provisions of only Tk2.87 crore. A cancelled Gulshan substation remains in CWIP, and no dividends were declared in 2023-24. Company Secretary Mohammad Kamruzzaman said adjustments will follow once legal and closure issues are resolved.
Private power producers face similar issues: Baraka Power gave over Tk155 crore in unsecured loans to subsidiaries, with its 51MW Fenchuganj plant closed since October 2024. Khulna Power shut two units in August 2024 after PPA expiry, causing asset erosion and five years of losses. Doreen Power’s accounting post-PPA expiry has also been questioned.
Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said uncertainty over government contracts and the absence of long-term planning are pushing listed power companies towards a crisis. “Timely contract renewals and market-oriented reforms are essential to ensure production continuity, corporate sustainability and renewed investor confidence,” she said.