DHI to divest shares of non-strategic companies

A successful year for DHI in terms of achieving their targets

DHI: The Druk Holding and Investments (DHI) will off-load its shareholdings in “non-strategic companies to the public in a phased manner, the chairman Dasho Sangay Khandu said during its annual press conference yesterday.

While international agencies have always pushed for divestment of shares, the DHI chief executive officer Dasho Karma Yezer Raydi said this must be viewed from a different perspective in a country that has a unique policy.

He said that DHI companies have been contributing to the government coffer in billions annually from dividends alone. Off-loading shares of some strategic companies would translate into loss of government revenue. Should the big companies divest their shares to the public, the only option for the government to generate revenue would be from taxes.

Based on past experience, there are also instances of a few individuals ending up  owning the majority of shares.

During the 2015-16 fiscal year, DHI remitted Nu 3.68 billion (B) to the government as dividend and another Nu 1.85B in taxes. The finance ministry and DHI had ventured into an agreement to remit Nu 1.85B and 90 percent of the profit after tax from Tala in the fiscal year.

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The chairman said DHI wanted to off-load 20 percent of Dungsam Cement shares initially. But since the company suffered loss, it was felt inappropriate to sell shares.

Divesting shares of non-strategic companies was also in the interest of promoting the capital market in the economy.

DHI saw an increase in its total income by almost 10 percent, mainly on account of increased dividend income from Bhutan Power Corporation (BPC) and Bhutan Telecom. The dividend income from its subsidiaries increased from Nu 5.7B to Nu 6.1B, of which 86 percent was accrued from the energy sector, meaning Druk Green Power Corporation (DGPC) and BPC.

The consolidated accounts reveal that DHI and it’s owned companies made a  profit after tax of Nu 5.5B in 2015 against Nu 4.3B in 2014.

Dasho Sangay Khandu said that 2015 was a successful year for DHI in terms of achieving its target.

DGPC has been able to increase its generation from 7,147 million units (MU) of energy to 7,381MU while the company reduced power import by 30MU. Exports increased by 57MU and it had also met the domestic demand which increased by almost 4 percent. DGPC made a post-tax profit of Nu 5.15B last year, an increase of 2.5 percent compared with 2014.

BPC’s profit after tax amounted to Nu 1.38B, an increase of 37 percent. Besides the power distributing company, in an attempt to electrify all households, was able to connect 730 houses with grid electricity last year.

“BPC is struggling to reach grid electricity to some remote areas,” the companies annual report stated. While electrification works in Laya is nearing completion, the officiating CEO said Bardo in Zhemgang, Jigmecholing in Sarpang and Dorona in Dagana would be connected within 2016.

Inaccessibility, difficult terrain, retaining workers and lack of support from the community were cited as some of the challenges to complete rural electrification. However, 99 percent of Bhutanese homes are now connected to grid electricity.

The Bhutan Telecom Ltd (BTL) generated a profit of Nu 516M profit last year compared with Nu 474M in 2014. The company has invested about Nu 800M in improving the mobile network. However, the CEO said that technology in communications changed every six months and it is difficult to keep up with customers’ demands. The company, he said would now focus on improving  reliability and efficiency.

Drukair suffered another loss of 32M. But the company has been able to reduce its loss from 130M the previous year. The CEO said they expected a loss of 200M but the airline was in a position to control the damage significantly.

The CEO said the Nepal earthquake had resulted in cancellation of 83 flights. Bhutan Airlines venturing into the Dehli and Bangkok sectors had doubled the carrying capacity while number of passengers had decreased. “Year 2016 would be defining for Drukair, the worst is over,” the CEO Tandi Wangchuk said.

It was yet another year of loss for Dungsam Cement Corporation Ltd (DCCL) which recorded a loss of Nu 737M, a decrease by about 19 percent. “Had it not been for the hydropower projects, Dungsam would sink,” the company’s CEO Dorji Norbu said. The market in India, he said has been affected by elections in India. The company however is strategising to capitalise on the Indian government’s huge budget allocation towards the construction sector.

The Construction Development Corporation Ltd (CDCL) profit grew by 4,195 percent. The company made a profit of Nu 28M after being Nu 0.7M in the red the previous year.

The Thimphu Tech Park Ltd CEO said the company besides achieving it target, brought in Nu 7M to 8M worth of USD into the country from one of its tenants, Scan Café alone..

Tshering Dorji

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