Summit Power profit nosedives 88pc on plant shutdowns, impairment loss

Summit Power reported a whopping 88 per cent year-on-year decline in profit to Tk 0.41 billion in FY25 due to the shutdown of nearly half of its plants and an impairment loss of Tk 1.52 billion shown in its financial statements.

As the government has shifted its power policy towards renewable energy and has become increasingly cautious about purchasing electricity from private producers to cut costs, companies like Summit Power are taking a major hit.

Around 77 per cent of Summit's plants run on heavy fuel oil (HFO), making them vulnerable to falling demand from the government.

According to data from the Bangladesh Power Development Board up until September this year, the government now generates 43 per cent of electricity on its own and 9 per cent through joint ventures with foreign partners, purchases 39 per cent from private producers, and imports another 9 per cent. Previously, a larger share of electricity had been sourced from private producers.

Summit Power's earnings plunged to Tk 0.38 per share in FY25 from Tk 3.13 per share the year before.

It said it had seven power plants, out of 15, shut in the year, with a combined capacity of 234 MW out of a total 930.55 MW.

As a consequence of these shutdowns, the company considered an impairment loss of Tk 1,520 million during the year, said the company.

Impairment loss for a private sector electricity producer means a permanent reduction in the recoverable value of assets, such as power plants, turbines, transmission equipment, or even long-term contracts.

If the current value or future earnings potential of an asset falls below its book value on the balance sheet, the company must record an impairment loss.

The private power producer had to charge big impairment losses as many factors, including gas shortages, have reduced output.

In addition, following the expiry of the Power Purchase Agreements (PPAs) with the government, four power plants operated only partially on a "No Electricity, No Payment" basis, while three others remained non-operational throughout the year, said the company in the earnings disclosure.

The company's net asset value fell to Tk 40.57 per share in FY25 from Tk 41.44 per share in FY24.

However, Summit declared a 10.5 per cent cash dividend for FY25, increased by 0.5 percentage points from the year before.

After the earnings disclosure, the stock of Summit Power dipped by 3.47 per cent to Tk 13.90 per share on the Dhaka Stock Exchange (DSE) on Thursday.

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