AITKEN SPENCE’S B’DESH POWER SECTOR HOPES SHRINK
Aitken Spence PLC, which has interests in hotels, shipping, power and plantations has exited from a proposed thermal power project in Bangladesh with authorities failing to provide suitable land for the plant. However discussions continue in relation to the second project.
The firm said in its annual report 2013/14 that it received Letters of Intent (LOI) from the Bangladeshi Power Development Board (BPDB) for two thermal power projects of 150 MW at Kaliakoir and 54.5 MW at Bhairab.
The firm said the power generation segment experienced a difficult year with segmental revenue declining by 22.1 percent
The terms of the LOI for the Kaliakoir project had required the government of Bangladesh to release an appropriate land to the developer.
“However due to their inability to provide such land, BPDB decided t o withdraw the project and cancel the LOI,” Aitken Spence told shareholders.
The company further said with the cancellation of the Kaliakoir project due to ‘circumstances beyond its control’, the viability of t he Bhairab project was compromised because expected returns of this project alone, failed to meet the investment criterion of the company.
“We remain in negotiations with the authorities in Bangladesh with a view t o addressing this issue. We will also continue to seek further opportunities for thermal power in the region,” the firm said.
According to the annual report, Aitken Spence has two strategic investment arms which have been set up t o construct, commission and operate a thermal power plant in Bangladesh, namely Ace Alliance Power Limited and Alliance Spence Power Limited.
The firm said the power generation segment experienced a difficult year with segmental revenue declining by 22.1 percent mainly due to two of We remain in negotiations with the authorities in Bangladesh with a view to addressing this issue its power plants i n Matara and Horana remaining i dle following the expiry of their power purchase agreements (PPA).
During the year, the segment has disposed its thermal power plant in Horana to an overseas buyer and said it made a provision for impairment of approximately Rs.400 million for t he remaining assets of these two power plants which had a negative impact on the segment and the group.
However in the medium term, the group is set to explore options to invest in renewable energy projects of less than 10 MW.
Meanwhile the power purchase agreement of its Embilipitiya power plant also comes to an end during the next financial year. Ace Power Embilipitiya is a joint venture between Aitken Spence and Caterpillar Inc., USA. The 100 MW plant is the group’s largest power project in its portfolio.
The company said that given the country’s power generation needs, the capacity offered by the Embilipitiya power plant remains vital to the national grid.
“It is hoped that the relevant authorities would take steps to ensure that the plant will not lie idle post expiration of the PPA,” the company said.
Aitken Spence Chairman, Harry Jayawardena said the group is presently discussing with Ceylon Electricity Board on the way forward for the Embilipitiya plant and is confident of a mutually beneficial outcome.
“We remain optimistic about our involvement in renewable energy through hydropower and wind power projects, and will seek growth avenues in these areas,” he added.