Doreen Power's asset revaluation shows its diminishing lifeline

Listed electricity producer Doreen Power saw its assets' value cut in a revaluation of its three plants of 66 megawatts as they stopped operations upon expiry of contracts with the government.

A revaluation done by K. M. Alam & Co. Chartered Accountants reduced the value of the plants' assets by 46 per cent to Tk 957 million.

Doreen Power Generations and Systems Limited and its three subsidiaries currently have six power plants with a total capacity of 291 megawatts. Out of that, Tangail, Narsingdi, and Feni plants have been reassessed.

Tangail's 22-megawatt plant started its operation in November 2008. The government had a power purchase deal with the plant until November 2023.

Narsingdi and Feni power plants, with another 44-megawatt capacity, began producing power in December 2008 and February 2009. Their agreements with the government ended respectively in December 2023 and February 2024.

So, there will be no revenue from these plants any more.

According to the company's financial statement for the first nine months of FY24, the asset value of the 66-megawatt plants accounts for 14 per cent of its consolidated property and equipment.

So, Doreen's Net Asset Value (NAV) per share has fallen by Tk. 4.53 from Tk. 52.34 in March this year.

Doreen's revenue has also received a blow.

The power plants, which have been shut, contributed more than 10 per cent of the company's total revenue earnings. Therefore, at least 10 per cent revenue will be lost as the plants are no longer in operation.

By the next 12 years, Doreen's revenue will fizzle out as there is a slim possibility of renewal of the agreements between the remaining three plants and the government.

Currently, it has three functional power plants.

Dhaka Southern 55 megawatts, Dhaka Northern 55 Megawatts and Chandpur Power Generation of 115 megawatts will supply power to the national grid for 7 to 12 more years.

The managing director of Doreen Power, Mostafa Moin, however, told The FE that he is hopeful that there will always be demand for heavy-fuel-oil-based power plants for their flexibility in starting and closing operations.

Meanwhile, after the latest disclosure of the company, the share price of Doreen Power slid 2.76 per cent to Tk 17.60 per share on the Dhaka Stock Exchange on Wednesday.

The stock's current price-to-earnings ratio is 5.92.

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