Listed private power producers face earnings pressure amid policy shift

Listed private power producers are beginning to absorb a shock that is set to deepen as the government pivots away from costly rental and furnace oil-based plants toward LNG, coal, and renewable energy.

The companies-except for Shahjibazar Power Co and Energypac Power Generation-witnessed a fall in revenue in the third quarter to March of FY26, against the backdrop of the government's unwillingness to renew power purchase contracts upon expiry. This led to partial utilisation of the plants. Meanwhile, some of these companies saw their finance costs rise, further eroding profits.

Despite the decline in revenue, however, many of the companies posted higher profits in the third quarter of FY26 compared to the same quarter of the previous year, as they received income from subsidiaries or associate companies. In some cases, the cost of goods sold and finance costs were shown to be lower without any explanation.

Overall, listed companies with older furnace oil-based plants are struggling more than non-listed ones operating efficient gas or LNG-based facilities, analysts said.

Sector leader United Power Generation & Distribution Company Ltd. posted a notable decline in earnings on the back of lower electricity sales and higher finance costs.

Industry insiders said gas price hikes without corresponding tariff adjustments, along with delayed payments from the Bangladesh Power Development Board (BPDB), further squeezed margins.

Summit Power Limited showed only marginal improvement from a weak base, as several of its plants remained shut following deal expiries. The company has increasingly been operating under a "no electricity, no payment" model, significantly reducing its capacity payment income.

Khulna Power Company Limited also faces structural challenges, as some of its major plants remain inactive following contract expiry, limiting its revenue base.

Smaller player GBB Power Ltd. also remains under pressure, mainly due to maintenance costs.

Energypac Power Generation, which belongs to the energy sector on the bourses but is no longer engaged in producing electricity, sank deeper into losses due to high borrowing costs and weak performance. It now provides power engineering solutions.

Sector insiders said the core challenge now lies in the transition from guaranteed returns in the form of capacity charge payments to performance-based earnings. The government's ongoing energy policy shift has accelerated this transition.

As a result, analysts expect continued divergence in earnings performance, with newer and more efficient plants gaining ground, while older, contract-dependent assets face declining profitability.

United Power Generation & Distribution Company

The leading listed private sector power producer reported a 35 per cent decline in profit in the January-March third quarter of FY26 to Tk 2.76 billion, compared to the corresponding period last year, due to lower production levels.

In the quarter, the company's revenue shrank nearly 30 per cent to Tk 6.74 billion, according to a disclosure.

Apart from dwindling profitability, the company's cash generation has also fallen due to collection delays caused by external macroeconomic factors.

Summit Power Limited

The power producer lost one-fifth of its revenue in the January-March quarter of FY26, falling to Tk 6.5 billion. Despite the reduction in revenue, Summit Power reported a more than 11 per cent jump in net profit, supported by a decline in the cost of production.

However, no explanation has been provided as to how the cost of production fell 9 per cent year-on-year in the third quarter to March this year.

Shahjibazar Power Co.

This power producer reported strong performance, mainly driven by income from sister concerns.

Khulna Power Company Limited

It earned no revenue in the quarter, yet reported profits by relying on income from its associate company.

GBB Power Ltd.

It had no revenue income but reported positive earnings in Q3 of FY26, though lower than in the same quarter of the previous year, based on non-operating income.

Energypac Power Generation

This private sector power company reported a larger loss this year as its finance costs increased threefold.

Doreen Power Generations and Systems Limited

Doreen Power Generations also sustained a decline in revenue but secured profit growth through reduced finance and production costs.

Baraka Patenga Power Limited and Baraka Power Limited

Most of the plants of the two companies have remained shut, but their associate companies, which are also power producers, generated moderate revenue.

Baraka Patenga's cost of goods sold was Tk 66 per Tk 100 of revenue in Q3 of FY25, which was drastically reduced to Tk 57 per Tk 100 of revenue in Q3, FY26. The company also reported lower general and administrative expenses year-on-year in the quarter.

Baraka Power also reported lower cost of goods sold and reduced finance costs, which helped increase net profit.

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