RPCL move to offload share creates question
Monday, 25 February 2008

UNB, Dhaka

A move by the Rural Power Company Limited to float its shares for public with an unresolved liability of about Tk 425 crore gave rise to questions among capital-market investors.

According to official sources, the RPCL, a subsidiary of the Rural Electrification Board and some Palli Bidyut Samittees, has planned to offload some of its shares on the stock market for investors.

The PBSs have 49 per cent shares in the RPCL while the REB holds the rest 51 per cent. Sources said that after the successful offloading of shares by two state-owned public enterprises in power sector-DESCO and PGCB—the RPCL took the move to come into the capital market.

Shares of both the DESCO and PGCB are being treated as hotcakes as they are making huge profits and they do not have such liabilities. But, the move of the RPCL has created lot of questions as the company has an unresolved liability of about Tk 425 crore which is payable to its terminated power-plant operator. They said offloading share with this huge unresolved liability might throw investors into a tricky situation.

The RPCL terminated its Mymensingh Power Plant's operation and maintenance company LIPPS without maintaining the due legal process in 2005. Following the termination, LIPPS went to a Singapore international arbitration court seeking compensation against the RPCL action.

After a long hearing from both sides, the arbitration court issued its ruling in October 2006 in favour of LIPPS, asking the RPCL to pay a huge sum as compensation. LIPPS officials claimed the compensation amount now stands at about Tk 425 crore, including interest and other charges.

Another case also still remained pending with the similar arbitration court regarding the RPCL's DNPP power project. But keeping the issue unresolved, the RPCL moved for its share offloading, which power-industry-insiders thought might let down the investors.

When contacted, power secretary M Fouzul Kabir Khan admitted the RPCL move. But he said the power division would not interfere in the matter unless the RPCL sought direction in this regard.

'If the RPCL goes into public offering, it would definitely put all its information regarding profits and liabilities to the public… So, the interested investors will get the scope to judge the share value,' he said.

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