FINANCIAL CLOSURE OF KABELI B-1 HYDROELECTRIC PROJECT (25 MW).

A consortium of banks led by Nepal Investment Bank Limited (NIBL) has approved a NPR 2.80 billion loan for the development of the Kabeli B-1 Hydroelectric Project (25 MW) in principal. The signature of loan agreement will take place within two months after clearing few formal procedures.



The run-of-the-river project with a capacity of 25 MW lies in Phanchthar and Taplejung districts. I am involved in this project from initial stage. From getting statutory approvals from the concerned departments while I was working for this company few years back to raising equity and debt right now on behalf of the investment bank, I am involved in this project in every stage. Since I get a lot of queries from around the world regarding debt and equity environment within the country, I hope this post will answer the questions.

EQUITY PLANNING

Out of NPR 1.20 billion, the promoters will inject 60 percent. The remaining 40 percent will be raised through IPOs. NIBL Capital is the issue manager.

FINANCIAL HIGHLIGHTS OF THE PROJECT

IRR of the Project	18.11%
NPV (NPR)	2,171,096,144
Normal Payback Period (yrs)	5.39
Discounted Payback Period (yrs)	8.44
B/C Ratio (Discounted)	1.54
Equity IRR	28.02%
Equity Payback Period (years)	3.91
DSCR for the First Year	1.66
Average DSCR	1.82
Plant Factor	64.72%
Unit Energy Cost per kWh (NPR)	3.53
Cost per MW (NPR)	160,000,000

Projected Income Statement
Particulars/Year	1	2	3	4	5
Total Energy in kWh	141,746,470	141,746,470	141,746,470	141,746,470	141,746,470
Price per kWh	5.38	5.54	5.70	5.87	6.03
Income from Energy Sale	762,774,394	785,657,626	808,540,857	831,424,089	854,307,321
Less:
Operation and Maintenance Cost	40,000,000	42,000,000	44,100,000	46,305,000	48,620,250
Royalty	17,861,326	18,284,666	18,708,006	19,131,346	19,554,685
Interest on Debt	302,115,080	288,335,341	272,961,026	255,807,613	236,669,227
Depreciation	106,666,667	106,666,667	106,666,667	106,666,667	106,666,667
Total Expenses	466,643,073	455,286,673	442,435,698	427,910,625	411,510,830
Profit Before Bonus & Tax	296,131,321	330,370,952	366,105,159	403,513,464	442,796,491
Less:
Bonus & Welfare Fund	5,922,626	6,607,419	7,322,103	8,070,269	8,855,930
Profit Before Tax	290,208,694	323,763,533	358,783,056	395,443,194	433,940,562
Less:
Tax	-	-	-	-	-
Profit After Tax	290,208,694	323,763,533	358,783,056	395,443,194	433,940,562
Dividend to Shareholders	180,000,000	180,000,000	180,000,000	180,000,000	180,000,000
Reserve Transfer to BS	110,208,694	143,763,533	178,783,056	215,443,194	253,940,562
Total Reserve in BS	110,208,694	253,972,227	432,755,283	648,198,478	902,139,039
Number of Shares	12,000,000	12,000,000	12,000,000	12,000,000	12,000,000
EPS	24.18	26.98	29.90	32.95	36.16
DPS	15%	15%	15%	15%	15%
Particulars/Year	6	7	8	9	10
Total Energy in kWh	141,746,470	141,746,470	141,746,470	141,746,470	141,746,470
Price per kWh	6.19	6.19	6.19	6.19	6.19
Income from Energy Sale	877,190,553	877,190,553	877,190,553	877,190,553	877,190,553
Less:
Operation and Maintenance Cost	51,051,263	53,603,826	56,284,017	59,098,218	62,053,129
Royalty	19,978,025	19,978,025	19,978,025	19,978,025	19,978,025
Interest on Debt	215,316,170	191,492,162	164,911,267	135,254,462	102,165,806
Depreciation	106,666,667	106,666,667	106,666,667	106,666,667	106,666,667
Total Expenses	393,012,124	371,740,679	347,839,976	320,997,371	290,863,626
Profit Before Bonus & Tax	484,178,428	505,449,874	529,350,577	556,193,181	586,326,927
Less:
Bonus & Welfare Fund	9,683,569	10,108,997	10,587,012	11,123,864	11,726,539
Profit Before Tax	474,494,860	495,340,876	518,763,566	545,069,318	574,600,388
Less:
Tax	-	-	-	-	-
Profit After Tax	474,494,860	495,340,876	518,763,566	545,069,318	574,600,388
Dividend to Shareholders	240,000,000	240,000,000	240,000,000	240,000,000	240,000,000
Reserve Transfer to BS	234,494,860	255,340,876	278,763,566	305,069,318	334,600,388
Total Reserve in BS	1,136,633,899	1,391,974,775	1,670,738,341	1,975,807,659	2,310,408,047
Number of Shares	12,000,000	12,000,000	12,000,000	12,000,000	12,000,000
EPS	39.54	41.28	43.23	45.42	47.88
DPS	20%	20%	20%	20%	20%
Particulars/Year	11	12	13	14	15
Total Energy in kWh	141,746,470	141,746,470	141,746,470	141,746,470	141,746,470
Price per kWh	6.19	6.19	6.19	6.19	6.19
Income from Energy Sale	877,190,553	877,190,553	877,190,553	877,190,553	877,190,553
Less:
Operation and Maintenance Cost	65,155,785	68,413,574	71,834,253	75,425,966	79,197,264
Royalty	19,978,025	19,978,025	19,978,025	19,978,025	19,978,025
Interest on Debt	65,248,169	24,058,466	-	-	-
Depreciation	106,666,667	106,666,667	106,666,667	106,666,667	106,666,667
Total Expenses	257,048,646	219,116,732	198,478,945	202,070,658	205,841,956
Profit Before Bonus & Tax	620,141,907	658,073,821	678,711,608	675,119,895	671,348,597
Less:
Bonus & Welfare Fund	12,402,838	13,161,476	13,574,232	13,502,398	13,426,972
Profit Before Tax	607,739,069	644,912,344	665,137,376	661,617,497	657,921,625
Less:
Tax	60,773,907	64,491,234	66,513,738	66,161,750	65,792,163
Profit After Tax	546,965,162	580,421,110	598,623,638	595,455,748	592,129,463
Dividend to Shareholders	300,000,000	300,000,000	300,000,000	300,000,000	300,000,000
Reserve Transfer to BS	246,965,162	280,421,110	298,623,638	295,455,748	292,129,463
Total Reserve in BS	2,557,373,209	2,837,794,318	3,136,417,957	3,431,873,704	3,724,003,167
Number of Shares	12,000,000	12,000,000	12,000,000	12,000,000	12,000,000
EPS	45.58	48.37	49.89	49.62	49.34
DPS	25%	25%	25%	25%	25%
Particulars/Year	16	17	18	19	20
Total Energy in kWh	141,746,470	141,746,470	141,746,470	141,746,470	141,746,470
Price per kWh	6.19	6.19	6.19	6.19	6.19
Income from Energy Sale	877,190,553	877,190,553	877,190,553	877,190,553	877,190,553
Less:
Operation and Maintenance Cost	83,157,127	87,314,984	91,680,733	96,264,769	101,078,008
Royalty	117,719,055	117,719,055	117,719,055	117,719,055	117,719,055
Interest on Debt	-	-	-	-	-
Depreciation	106,666,667	106,666,667	106,666,667	106,666,667	106,666,667
Total Expenses	307,542,849	311,700,705	316,066,455	320,650,491	325,463,730
Profit Before Bonus & Tax	569,647,704	565,489,847	561,124,098	556,540,062	551,726,823
Less:
Bonus & Welfare Fund	11,392,954	11,309,797	11,222,482	11,130,801	11,034,536
Profit Before Tax	558,254,750	554,180,050	549,901,616	545,409,260	540,692,287
Less:
Tax	111,650,950	110,836,010	109,980,323	109,081,852	108,138,457
Profit After Tax	446,603,800	443,344,040	439,921,293	436,327,408	432,553,829
Dividend to Shareholders	300,000,000	300,000,000	300,000,000	300,000,000	300,000,000
Reserve Transfer to BS	146,603,800	143,344,040	139,921,293	136,327,408	132,553,829
Total Reserve in BS	3,870,606,966	4,013,951,007	4,153,872,300	4,290,199,708	4,422,753,537
Number of Shares	12,000,000	12,000,000	12,000,000	12,000,000	12,000,000
EPS	37.22	36.95	36.66	36.36	36.05
DPS	25%	25%	25%	25%	25%
Particulars/Year	21	22	23	24	25
Total Energy in kWh	141,746,470	141,746,470	141,746,470	141,746,470	141,746,470
Price per kWh	6.19	6.19	6.19	6.19	6.19
Income from Energy Sale	877,190,553	877,190,553	877,190,553	877,190,553	877,190,553
Less:
Operation and Maintenance Cost	106,131,908	111,438,504	117,010,429	122,860,950	129,003,998
Royalty	117,719,055	117,719,055	117,719,055	117,719,055	117,719,055
Interest on Debt	-	-	-	-	-
Depreciation	106,666,667	106,666,667	106,666,667	106,666,667	106,666,667
Total Expenses	330,517,630	335,824,226	341,396,151	347,246,672	353,389,720
Profit Before Bonus & Tax	546,672,923	541,366,327	535,794,402	529,943,881	523,800,833
Less:
Bonus & Welfare Fund	10,933,458	10,827,327	10,715,888	10,598,878	10,476,017
Profit Before Tax	535,739,464	530,539,001	525,078,514	519,345,003	513,324,816
Less:
Tax	107,147,893	106,107,800	105,015,703	103,869,001	102,664,963
Profit After Tax	428,591,571	424,431,201	420,062,811	415,476,002	410,659,853
Dividend to Shareholders	300,000,000	300,000,000	300,000,000	300,000,000	300,000,000
Reserve Transfer to BS	128,591,571	124,431,201	120,062,811	115,476,002	110,659,853
Total Reserve in BS	4,551,345,108	4,675,776,309	4,795,839,120	4,911,315,123	5,021,974,976
Number of Shares	12,000,000	12,000,000	12,000,000	12,000,000	12,000,000
EPS	35.72	35.37	35.01	34.62	34.22
DPS	25%	25%	25%	25%	25%
Particulars/Year	26	27	28	29	30
Total Energy in kWh	141,746,470	141,746,470	141,746,470	141,746,470	141,746,470
Price per kWh	6.19	6.19	6.19	6.19	6.19
Income from Energy Sale	877,190,553	877,190,553	877,190,553	877,190,553	877,190,553
Less:
Operation and Maintenance Cost	135,454,198	142,226,908	149,338,253	156,805,166	164,645,424
Royalty	117,719,055	117,719,055	117,719,055	117,719,055	117,719,055
Interest on Debt	-	-	-	-	-
Depreciation	106,666,667	106,666,667	106,666,667	106,666,667	106,666,667
Total Expenses	359,839,920	366,612,629	373,723,975	381,190,887	389,031,146
Profit Before Bonus & Tax	517,350,633	510,577,923	503,466,578	495,999,665	488,159,407
Less:
Bonus & Welfare Fund	10,347,013	10,211,558	10,069,332	9,919,993	9,763,188
Profit Before Tax	507,003,621	500,366,365	493,397,246	486,079,672	478,396,219
Less:
Tax	101,400,724	100,073,273	98,679,449	97,215,934	95,679,244
Profit After Tax	405,602,896	400,293,092	394,717,797	388,863,738	382,716,975
Dividend to Shareholders	300,000,000	300,000,000	300,000,000	300,000,000	300,000,000
Reserve Transfer to BS	105,602,896	100,293,092	94,717,797	88,863,738	82,716,975
Total Reserve in BS	5,127,577,872	5,227,870,964	5,322,588,761	5,411,452,499	5,494,169,474
Number of Shares	12,000,000	12,000,000	12,000,000	12,000,000	12,000,000
EPS	33.80	33.36	32.89	32.41	31.89
DPS	25%	25%	25%	25%	25%

I wish the team of this project GOOD LUCK in advance.