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The business of Khulna Power Company may come under pressure as its two existing power plants are set to close down upon the expiration of power purchase agreements with the Bangladesh Power Development Board (BPDB).
The amended power purchase agreements (PPAs) on 'No Electricity No payment' basis for KPC Unit II 115MW Plant and KPC 40MW Noapara Plant are going to expire tomorrow (Sunday), said the company in a stock exchange filing on Thursday.
In a letter, the BPDB has instructed the company to shut down the power plants from that date.
The company, however, has applied for an extension of the agreements, and they have received verbal confirmation that the process is underway, it said.
Khulna Power is the first Independent Power Producer (IPP) of the country in the private sector jointly established by the United Energy and Summit Corporation under the Private Sector Power Generation Policy of Bangladesh 1996 (Revised 2004), and has been in operation for the last 26 years.
Khulna Power Company has operated three electricity units -- KPCL-1 plant with a capacity to generate 110MW electricity, KPCL-2 (115 MW) and KPCL-3 (40MW).
The dual fuel-fired KPCL-1 went into commercial production on October 13 in 1998 with a 15-year contract and it shut down in 2018 after a 5-year extension.
Though Khulna Power sought another extension for that plant, the Power Development Board turned down the application.
The two other plants --- KPC Unit-2 plant and KPC 40 MW Noapara plant -- were continuing their operation successfully from 2011.
KPC Unit II 115 MW plant
KPC Unit-2 115 MW plant was established on 22 June 2010 with a project cost of $75 million under a contract with BPDB for supplying electricity on rental basis initially for 5 years.
The Power Purchase Agreement (PPA) had been extended for another 5 years with effect from 01 June 2016. Later, the amended PPA was executed in April 2022 for another two years on ''No Electricity No Payment'' basis with a provision for extension of terms which will expire on Sunday.
KPC 40 MW Noapara plant
KPC 40 MW Noapara Plant (Formerly "Khanjahan Ali Power Company) was set up on 22 June 2010 with a project cost of $25 million under a contract with BPDB for supplying electricity on rental basis initially for 5 years.
The Power Purchase Agreement (PPA) had been extended for another 5 years with effect from 29 May 2016. Later, the amended PPA was executed on 28 April 2022 for another two years on ''No Electricity No Payment'' basis with a provision for extension of terms which will expire on Sunday.
The company made a profit of Tk 16 million in July-December 2023, after suffering a loss of Tk 794 million in the same period a year before.
Khulna Power officials declined to comment on the issue.
Listed in 2010, Khulna Power's stock has remained stuck at the floor price at Tk 26.60 since August 2022.