Financial Analysis of Ashuganj Power Station Company Limited (APSCL) to Evaluate its Viability

Ashuganj Power Station Company Limited (APSCL)

The power sector in Bangladesh faced numerous problems characterized by lack of supply capacity, frequent power cuts, unacceptable quality of supply, and poor financial and operational performance of the sector entities. To address these issues, the Government of Bangladesh (the Government) adopted in 1994 a policy paper titled the Power Sector Reforms in Bangladesh (PSRB), which was formulated in consultation with the major development partners in the power sector. One of the goals of PSRB was to corporatize generation assets in the power sector and eliminate monopolies and foster competition, and thereby achieve improved operational performance of the sector entities. Ashuganj Power Station (APS) is a major power station in Bangladesh owned and operated by the Bangladesh Power Development Board (BPDB) with an installed capacity of 728 mega-watts (MW) based on natural gas fuel, comprising two steam turbine units of 64 MW each, three steam turbine units of 150 MW each, and one combined cycle unit of 150MW. Due to funding constraints and lack of modern management practices, the operating capacity of the power station had dropped over the years. In an effort to improve financial self-sufficiency and reliability, the Government decided to establish a new corporation – the Ashuganj Power Station Company, Limited (APSCL) to take over ownership and operation of APS. The Ashuganj Power Station Company Limited was incorporated on 28 June 2000, followed by constitution of Board and appointment of management on 28 December 2001 and 24 December 2002, respectively. This financial analysis is aims to assess the current financial condition of the APSCL and based on the analysis an evaluation of financial viability was projected for the next 15 years.

Just after signing of the contract, the team of personnel and resources required for the study were mobilized. An introductory meeting and discussion for the having the available financial information and records and finalizing the work plan has done. Available books, ledger, journal, statements records, literature and documents was collected and reviewed by us for firming up the analysis and evaluation work. The analytical framework was developed based on the conception and understanding developed through the review of available financial statements, records and documents of APSCL as well as the operational manual. Further to this, the objectives, the scope of the work and the time allocated to conduct the assignment have been carefully reviewed. F inancial ratios were used to form the basis for the financial analysis and assessment of the financial viability. An accounts review system was operated where all accounts were entered to generate the ratios and comparators that has used. Finally the report was prepared analyzing financial statement to comments on performance and position of the company.