After suffering heavy losses from foreign currency fluctuations while repaying foreign loans, state-owned power distributor Dhaka Electricity Supply Company PLC (Desco) returned to profit in FY26, buoyed by non-operating income and the absence of foreign exchange losses amid a stable currency market.
Interest income from fixed deposit receipts (FDRs), which makes up the bulk of its non-operating income, rose 23% year-on-year to Tk124 crore. The company has FDR investments worth more than Tk750 crore in several banks.
Desco also recorded a foreign exchange gain of Tk4.42 crore, according to its audited financial statements.
Meanwhile, its auditor has recently raised concerns over Tk114.48 crore deposited with financially distressed banks, saying there is significant doubt over whether the funds can be recovered.
Although the company stopped accruing interest on these deposits, it did not set aside provisions for the doubtful investments, the auditor opined.
In FY26, Desco posted a profit of Tk44 crore, with earnings per share (EPS) of Tk1.01, reversing a loss of Tk125 crore, or Tk3.15 per share, in FY25.
The company had reported losses for three consecutive years from FY23 to FY25, as exchange rate fluctuations increased the cost of repaying its foreign loans.
Before that, Desco had enjoyed steady profit growth from its monopoly electricity distribution business, earning Tk63 crore in FY22.
Over the three years, the company accumulated losses totalling Tk1,171 crore, pushing its retained earnings into negative territory. Due to foreign currency fluctuations, it incurred a staggering Tk840.84 crore in losses, according to its audited annual report.
The report said Desco incurred no foreign exchange gain or loss on loans from the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) in FY26, as the US dollar exchange rate remained unchanged at Tk122.85 on 30 June 2025 and 30 June 2026.
"Conversely, the exchange rate for the Japanese yen appreciated from Tk0.8493 per JPY as of 30 June 2025 to Tk0.7586 per JPY as of 30 June 2026. Consequently, a net foreign exchange gain of Tk4.42 crore was recognised in respect of Jica loans for the year," the report said.
Electricity consumption rises, but distribution revenue falls
Despite a Tk432.93 crore increase in the total value of electricity distributed to consumers, Desco's distribution revenue declined slightly in FY26, according to its annual report.
The total value of electricity distributed to consumers rose by nearly 6% to Tk7,774.99 crore in FY26 from the previous fiscal year. However, distribution revenue fell by 1% to Tk641 crore, as payments for electricity purchases from the Bangladesh Power Development Board (BPDB) and wheeling charges increased.
The annual report for the financial year ended June 2026 also showed an increase in overall electricity consumption.
Consumers used 7,444.77 million kilowatt-hours (kWh) of electricity in FY26, up from 7,113.69 million kWh in the previous fiscal year.
Domestic users accounted for the largest share of consumption, at 47.11%, followed by commercial and office users at 15.68% and industrial consumers at 9.81%, the audited report said.
Tk114.48cr stuck in FDRs with distressed banks
According to the audited report, Desco held FDR investments worth Tk756.43 crore in several banks. Of this amount, Tk250 crore was placed under lien as security for a secured overdraft facility.
The company had Tk5.60 crore invested in Bangladesh Commerce Bank, Tk20.84 crore in First Security Islami Bank, Tk11 crore in Global Islami Bank, Tk18.97 crore in Padma Bank, Tk37.52 crore in Social Islami Bank and Tk20.55 crore in Union Bank. The investments total Tk114.48 crore.
Given the financial difficulties faced by these banks and the uncertainty over whether the deposits and related interest income can be recovered, Desco's management has not accrued interest income on the FDRs since 30 June 2024, the auditor said.
The auditor also referred to a Bangladesh Bank circular issued on 31 August 2026 regarding the repayment of deposits and investments held by non-institutional investors, or individual depositors, without interest.
However, as of the reporting date, the central bank had not issued any specific directive on repaying deposits and investments held by institutional investors.
"Accordingly, the company is awaiting further instructions from Bangladesh Bank and will take appropriate action upon receipt of such guidance," the auditor said.
In its qualified opinion, the auditor said the stuck FDRs raised significant doubts about the recoverability of the investments. Desco had not made any provision for doubtful deposits in its accounts.
"Provision or impairment loss has not been recognised against the doubtful amount, as required under IFRS 9 – Financial Instruments. As a result, the assets and profit are overstated by Tk114.48 crore. Had the necessary provision been recognised, the reported profit would have turned into a loss, resulting in significantly lower net asset value (NAV) and earnings per share," the auditor said.
Tk311cr receivable from Bihari Camp
Desco reported Tk536.11 crore in receivables from consumers as of 30 June 2026, according to the auditor's report. Of the total, Tk320.65 crore appeared to be irrecoverable, comprising Tk311.66 crore owed by Bihari Camp and Tk8.99 crore in other receivables.
The auditor said the Bihari Camp dues had accumulated over a long period and continued to be carried forward in the company's accounts.
However, Desco had recognised only Tk4.21 crore as a provision for bad debts, leaving a shortfall of Tk316.44 crore.
As a result, the company's assets were overstated and its loss for the year understated by the same amount, the auditor said.