Profit of BPC falls by almost 50 percent

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    KATHMANDU, Feb 22

    Butwal Power Company (BPC)The net profit of Butwal Power Company (BPC) has dropped substantially with the company, that has investment of the government and commoners alike, only earning Rs 243.90 million in the fiscal year 2069/70 which is 49.6 percent less than Rs 483.50 million earned in the preceding year.

    The annual general meeting (AGM) of BPC is being held on Sunday (today) and the dividend offered for the shareholders has also fallen along with the drop in net profit. BPC has proposed to pay dividend of 18 percent from the profit of last fiscal year. It had given 25 percent dividend in the preceding year and 20 percent dividend and 10 percent bonus share in the year before that. The per share income of BPC has also been limited to Rs 24.20 from Rs 46.72 of the preceding year. Its brief economic report shows that the dividend given to the company’s shareholders has been falling in the past few fiscal years.

    BPC now is dependent on dividends received from promoter Himal Power Limited that is operating 60 MW Khimti Hydropower Project. BPC has 17 percent stake in Himal from where it had received Rs 241.40 million in dividends in the last fiscal year. BPC is holding its AGM a month and half later to show a greater profit by adding the dividends received from Himal. BPC used to hold AGM by mid-January at the latest.

    The shutdown of Andhikhola Hydroproject and fall in dividends from other associate companies like Himal, Nepal Hydro and Electric Limited have affected net profit of BPC. The power purchase agreements (PPA) for Jhimruk and Andhikhola projects operated by BPC have expired last July. The Nepal Electricity Authority (NEA) and BPC have yet sign PPA even seven months into the current fiscal year. BPC has showed profit from sale of electricity even though PPA has not been signed. Generation of electricity from Jhimruk has fallen by 20.66 percent in comparison to the preceding fiscal year, according to BPC’s brief economic report. Income from sale of electricity also fell by 5.4 percent in the last year.

    Fifty percent stake of Khimti is being transferred to NEA from July, 2020 according to agreement. The current PPA will also finish after that. The dividends BPC receive from Himal will also fall massively after that. Khimti and Bhotekoshi projects are controversial due to PPA done in US dollar. BPC is set to be affected after cheaper PPAs are signed in Nepali currency. BPC will not be in a position to provide dividends to shareholders after 2020 if it does not develop new projects and only depend on Himal.

    The government had sold BPC to Shangrila Energy for Rs 870 million. Shangrila has 68.95 percent stake in BPC, commoners 10 percent, government 9.9, Intercast Nepal 6, United Mission to Nepal 2.79, staffers 2 and NEA 1.

    Cost raised before construction

    Construction of Andhikhola Hydropower has already been delayed by one year though it was targeted to be finished by last April. BPC is making additional investment of Rs 1.20 billion to expand the project capacity by 4.3 MW to 9.5 MW. BPC has raised the per MW cost of the project to Rs 280 million even though the current per MW cost of projects is Rs 160 million at most.

    BPC has showed that it has invested tens of millions on Kabeli and Nyadi projects even before construction. It has invested Rs 361.50 million on 37.6 MW Kabeli A that is set to be constructed through Kabeli Energy Limited. This investment is only till last fiscal year. This is enough to construct a 2 MW project.  Promoters claim that there need not be investment of more than Rs 100 million for feasibility study of a project. Construction of the project is not certain.

    Similarly, the cost of preparations for 30 MW Nyadi project to be constructed through Nyadi Hydropower Limited has also been raised. BPC has already invested Rs 350 million for study until the last fiscal year, which is higher than other projects. BPC has stated that all the works of the project have been postponed citing that PPA has not been done in dollar. The project has been affected adversely due to the decision of NEA to not do PPA in dollar.

    Source : Baburam Khadka / Karobar Daily