Desco suffers losses for first time in 20 years

State-run Dhaka Electric Supply Company Ltd (Desco) suffered a loss in the financial year of 2022-23, for the first time in 20 years, as the cost to buy bulk electricity rose at a higher rate than the spike in retail prices.

Desco -- which is responsible for electricity distribution in the capital's west and north-eastern areas -- incurred losses of Tk 541 crore in the financial year ending in June 2023, the company said in its annual report published yesterday.

It had posted profits of Tk 63 crore the previous year.

Earnings per share (EPS) of the company became negative at Tk 13.61 for the year ending on June 30 this year.

This is the first time the electricity supply company made a loss since financial year 2001-02. At that time, Desco reported a loss of Tk 5.3 crore, according to its annual reports.

"We have incurred losses because of the difference between our purchase rate of bulk electricity and sales rate," said Mohammad Rashedul Huq Shamce, company secretary of Desco.

The publicly listed company, in a disclosure on the Dhaka Stock Exchange website, said EPS decreased significantly due to foreign exchange fluctuations and a sharp fall in distribution revenue due to the disproportional increases in bulk and retail electricity prices.

The power distribution company attributed Tk 428 crore of its losses to foreign exchange fluctuations, saying it had to spend more to buy dollars and make foreign payments due to the depreciation of the local currency.

In financial year 2021-22, Desco's losses from foreign currency fluctuations stood at Tk 8.4 crore.

It further added in its annual report that its energy purchase cost grew 21 percent whereas its sales increased 14 percent in 2022-23.

As such, overall distribution revenue of the company slumped 48 percent year-on-year to Tk 268 crore in the financial year of 2022-23 from Tk 520 crore a year ago, according to its annual report.

Desco began operations in September 1998. It had 12.40 lakh clients as of June this year.