Listing of five SoEs to be delayed over share money deposit rules

Mostafizur Rahman | Published: 23:43, Jul 13,2020

 
 

An Ashuganj Power Station Company Limited web site photo shows power plants at the company premises. The listing of five state-run energy companies, including APSCL, is likely to be delayed due to ensuring compliance with rules formulated recently by the Financial Reporting Council asking the SoEs to issue shares against the government’s share money deposits within six months.

The listing of five state-run energy companies is likely to be delayed due to ensuring compliance with rules formulated recently by the Financial Reporting Council asking the SoEs to issue shares against the government’s share money deposits within six months.

The current coronavirus pandemic situation in the country has also become a major hurdle to expediting the process of issuing shares and also for going public.

The FRC on February 11 this year issued a notification, saying that companies must convert share money deposits within six months of depositing money, and the deposited money must not be returned.

On February 2, finance minister AHM Mustafa Kamal declared that the government instructed five energy companies to go public, and gave them two months to assess the current value of their assets prior to offloading shares of the companies.

The five companies are North West Power Generation Company Limited (NWPGCL), Electricity Generation Company of Bangladesh Ltd (EGCB), Ashuganj Power Station Company Ltd (APSCL), BR Powergen Ltd and Gas Transmission Company Limited (GTCL).

Besides, 10 per cent more shares of already listed Titas Gas Transmission and Distribution Company Ltd (TGTDCL) and Power Grid Company of Bangladesh would be offloaded in line with the new decision.

The companies are yet to complete valuation of their assets.

Meanwhile, the FRC rules have raised the necessity of converting a huge amount of share money deposits of the government in the companies into shares immediately, officials of the companies said.

As per annual financial reports in 2019, the five energy companies held an accumulated Tk 5,109.5 crore in share money deposits of the government that must be converted into shares by October this year.

The officials said that they were giving importance on issuing shares in favour of the government and working on the issue with the government’s officials.

The government usually invests in different projects of its companies as 60 per cent loans and 40 per cent equity which the companies have kept as share money deposits for years.

The government’s equity in NWPGCL was the highest, Tk 2,390.96 crore, followed by GTCL Tk 1,635.48 crore, EGCB Tk 910.30 crore, APSCL Tk 124.76 crore and BD Powergen Tk 48 crore as per the latest data available in the companies’ financial statements.

EGCL managing director Arun Kumar Saha told New Age that the company would follow the government instruction, but the process could take times considering the pandemic situation.

‘We are in discussion with the government officials about issuing shares against share money deposits of the government and also for going public,’ he said.

He also said that the government was the owner of the company at the end, and its decision would be followed.

The officials of the  companies, however, said that the issuance of shares would bar them from enjoying the direct listing facility on the capital market as the listing regulations of Dhaka and Chittagong stock exchanges mentioned that no company would enjoy direct listing if it issued shares other than bonus shares in preceding two years of submission of application for such listing.

As per the government’s recent decision, the five energy companies would be listed under the direct listing system within this year.

Officials of stock market regulator Bangladesh Securities and Exchange Commission said that a couple of companies had come to the commission to discuss the barriers.

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