Information Document - Dhaka Stock Exchange

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.13.0 OBSERVATION SUMMARYRating Comforts• Sound equity base• Sound debt repayment background• High quality plant• Satisfactory profitability• Government guarantee againstminimum power purchase• No market risk regarding demand• Government supportive policiesBusiness Opportunities:• Government Incentives• Increasing demand for electricityRating Concerns:• Fully dependent on O&Moperator’s performance• Low return compared to highcapital intensiveness• Dependency mainly on importedraw materials• Tariff rate fixed by governmentBusiness Challenges:• Volatility of oil prices ininternational market• Dependency on foreigntechnology14.0 CONCLUSIONThe power sector of Bangladesh has been passing through a critical stage due to manyreasons including shortage of production compared to demand. According to PBD, the demandof electricity reached to 5500 MW, whereas daily power generation stayed between 3300 MWto 3400 MW, the same was also produced in 2004-05. This wide gap between generation anddemand is not solely for no new production but also lack of consistent expansion oftransmission and distribution channels. Consequently, per capita electricity generation orcoverage of population under electricity not achieved as per Power Sector Master Plan (PSMP).Moreover acute shortage of natural gas makes volatile the power generation. Overall, thepower sector of Bangladesh falls in a disaster. KPCL as a power generation company runssuccessfully since its commercial operation. The profitability, solvency and efficiency of thecompany improved over the periods. Good exposures of the entrepreneurs in power sectorand government supportive policy help to maintain company’s present stability.END OF THE REPORT[Information used herein is obtained from sources believed to be accurate and reliable. However, CRISLdoes not guarantee the accuracy, adequacy or completeness of any information and is not responsible forany errors or omissions or for the results obtained from the use of such information. Rating is an opinion oncredit quality only and is not a recommendation to buy or sell any securities. All rights of this report arereserved by CRISL. Contents may be used by news media and researchers with due acknowledgement.]Page 10 of 15