State-run fuel, power companies make higher profits
Most state-run listed power and energy companies secured higher profits year-on-year during the July to September period while ripple effects of the Russia-Ukraine war, including skyrocketing energy prices, had been turning lives of the masses topsy-turvy.
In the last few months, entrepreneurs had been urging to reduce energy prices. However, the government had stated that it had no financial scope to do so.
As a result, the private sector had been having to absorb the pressure, which was subsequently adversely affecting their profits.
In this situation, the listed state-run energy companies disclosed their financial reports showing that their performance in making a profit was better.
Among six listed state-run energy companies, four saw higher profits in the first quarter of the financial year although most of the private-run companies witnessed lower profits.
When the government increased the fuel price the last time, the prices were in a downtrend in the global market so it was assumed that the government will make profits from the price adjustments, said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue.
Per barrel crude oil soared to $121 in June this year which was downed to $88 in August and to $82 at the end of September, shows the Oilprice.com data.
On August 5, the government hiked fuel prices by up to 51.7 per cent, the highest in the country's history, reasoning price hikes in the global market.
"However, when the mass people are suffering from lower purchasing power through higher inflation rate then the government-run companies are making huge profits, this is not expected," said Moazzem.
The government should launch the process of price adjustment of the fuels with the global market. In the short-run, it can reduce the prices which will give comfort to the people, small and medium enterprises (SMEs) and businesses, he added.
Profits of Dhaka Electric Supply Company (DESCO), a state-run electricity supplier, more than doubled to Tk 11.50 crore, according to the company's financial reports.
Jamuna Oil Company, a government-owned fuel supplier, saw a staggering 62 per cent jump in its profits to Tk 66 crore.
Another petroleum product seller, Meghna Petroleum, logged 44 per cent higher profits to Tk 94 crore.
Profits of Padma Oil Company increased 28 per cent to Tk 68 crore.
However, the Titas Gas Transmission and Power Grid Company saw lower profits.
Though the state-run companies made more money in the period, most listed private sector energy companies struggled to continue their profit growths due to the depreciation of local currency against the US dollar, which increased their costs.
Among the listed 23 fuel and power companies, 19 disclosed their data for the first quarter.
Of the 19, nine companies saw lower profits, three higher losses and the profit of one remained the same.
Most listed private energy companies informed significant changes in profits due to significant increases in losses from foreign currency transactions.
Yeasin Ahmed, company secretary of Shahjibazar Power Company, told The Daily Star that almost all energy companies saw lower profits this year mainly for the same reason and that was the depreciation of the local currency against the greenback.
Bangladesh Bank's data shows that the exchange rate stood at Tk 107.5 per dollar on September 29, down 25.7 per cent year-on-year.
"When we opened LCs (letters of credit) to import HFO, then the dollar rate was Tk 85 to Tk 86 but at the mature period in the quarter, adequate dollar was unavailable and price was close to Tk 120," said Ahmed.
As a result, the costs rose and the profits of power companies fell, he added.
Comments