Information Document - Dhaka Stock Exchange

Additional disclosure by the management as requested by DSEKhulna Power Company Ltd. (“KPCL”) shall continue its operation on expiry of the current PowerPurchase Agreement (“PPA”) with Bangladesh Power Development (“BPDB”) for the reasons:-1.1 That Article 2.3 of the PPA has the clear provision for extension of duration of the PPA.1.2 That KPCL plant is the most reliable plant in the BPDB grid, available for 363 days of theyear and with its 19 generating units, it is the most flexible and capable to meet BPDB’sever varying load demand.1.3 That the plant operates on Furnace Oil, for dwindling natural gas production in the country,the operation of the KPCL plant shall be continued for the years to come. The Governmentpolicy on utilization of energy has already been shifted to use of liquid fuel for generationof electricity, accordingly the future power plants are being built based on liquid fueloperation.1.4 That KPCL plant is the least cost plant operated on liquid fuel.1.5 That the existing shortage in generation capacity of the country shall continue to existmuch beyond the year 2013, when the tenure of the current PPA expires.1.6 That for the reasons stated above the Government of Bangladesh is actively consideringexpansion the KPCL plant capacity by another 100 MW, its apparent that the extension ofthe current PPA would be natural viable option for BPDB to minimize overall generationshortfall.Additional disclosure by the management as requested by CSE1. El Paso Corporation (“El Paso”) was the sponsor shareholder of Khulna Power Company Ltd. (“KPCL”) andprovided Term Loan amounting to USD 44.17 million during the implementation of the project. The loanwas being repaid on 18 semi-annual installments. In the year 2008, before the full repayment of termloan, El Paso, as a part of its corporate business strategy, decided to withdraw from the power sector ofthis region. Accordingly disposed of their shareholding in KPCL to other existing sponsor shareholders, i.eSummit Industrial & Mercantile Corporation (Pvt) Ltd. and United Enterprises & Co. Ltd. The outstandingbalance of Term Loan amounting to USD 1.322 million (Equivalent BDT 91.48 million) was waived as beinga part of total purchase consideration package.2. As mentioned above, as a part of their corporate business strategy, El Paso had withdrawn theirinvestment from the power sector of this region. Apart from Bangladesh, they had also sold out theirpower establishment in India, Pakistan, China, Phillipine and Korea. El Paso’s earnings from the powersegment comparing to their credit exposure, country risk and other financial involvement wasinsignificant. Moreover, El Paso wanted to focus on their core business i.e, Gas exploration and pipelinenetwork. Therefore, their main object was to get rid of their power investment in this region. Under theMembers’ Agreement, El Paso was obligated to dispose their share holding in KPCL to the other interestedexisting shareholders. Accordingly, El Paso had offered their shareholding to Summit and United. Underthe Members Agreement, El Paso was obligated to shoulder about USD 40 million exposure required for theoperation of the project. Therefore, in order to get rid of those obligations, El Paso had disposed of theirshare under special consideration.As per the Members Agreement, Wartsila was also required to provide corporate guarantee and otherundertakings required for the working capital facilities and operation of the project. Wartsila was notinterested to take all these huge exposure for their small shareholdings, rather wanted to focus on theirO&M operation business and other business prospect with Summit and United and therefore offered theirshareholding to the existing shareholders under special consideration.93