Staff of Employee provident fund will be the next overnight millionaire

Employee’s Provident Fund (EPF), Karmachari Sanchaya Kosh (KSK) in Nepali, manages provident Fund in Nepal on behalf of the Government of Nepal (GoN) for government, public and private sector employees and come under Ministry of Finance. 

It may come as a surprise to many of us that the employees of EPF will be the next overnight millionaire in Nepal. 

The boom in hydropower business has benefited the employees of EPF the most. Besides managing provident fund, EPF has emerged as one of the leading companies in Nepal for hydro lending. As for the company, EPF will receive interest from such investment. But for the employees of EPF, they will receive shares in such hydropower companies.

EPF only lends money to those hydropower projects where their staffs will get opportunity to invest in the public share at par value. In fact, one of the main conditions for getting EPF’s loan is to allocate certain percentage of public shares to their staffs at par value. This kind of unethical business practice is only found in Nepal, I guess.

To give you a rough idea how much shares the EPF’s staff will get, here are the projects where EPF’s staff will get a preferential treatment.

Upper Tamakoshi Hydropower Project.

Since there are just 500 EPF staffs, the principle financier of the project, each of the EPF staff will be getting 3,050 units or 15 lakh 24 thousand, nine hundred 60 units, which amounts to 1.44 percent of the total primary shares.

For further reading, please visit  Upper Tamakoshi Hydropower Project and Its IPO; Fully Explained

Sanjen Jalavidhyut Company Limited (SJCL)

It is a subsidiary of Chilime and was incorporated in February 2010 as a public limited company. SJCL has planned to develop two new projects–Sanjen Hydroelectric Project (SHEP) having capacity of 42.5 MW and Sanjen(Upper) Hydroelectric Project (SUHEP) of capacity 14.8 MW in Rasuwa district of Central Development Region. Both the projects SHEP and SHUEP are running in parallel to meet the target of completion in December 2016 A.D and June 2016 A.D respectively. The plant is planned to install in the National Grid through a single circuit transmission line at Chilime hub located at the Rasuwa district.

A tri-partite loan arrangement has been signed between EPF, Chilime and SJCL. The equity investment will be made through 51% promoter share and 49% public share. Chilime has 38% shareholding in SJCL.

Share Structure

Chilime Hydropower Company	38%
Nepal Electricity Authority	10%
Rasuwa DDC and 18 VDC	3%
Project-affected Local People	10%
Employees of the Promoters	4%
Employees of EPF	1%
Depositers of EPF	19%
General Public	15%

Rasuwagadhi Hydroelectric Project.

This project has aimed to develop Rasuwagadhi Hydroelectric Project having capacity of 111 MW. It is located in Rasuwa district, Bagmati Zone of Central Development Region. The project is accessible by the Kathmandu -Trisuli - Somdang road at a distance of 130 km to the north of Kathmandu to reach to Syabrubesi and then around 16 km from Syabrubesi to the project site at Rasuwagadhi. A 50:50 debt-equity structure will be employed for financing this project.  Debt portion of the project will be fully financed by EPF for which the tri-partite loan agreement has been signed on 8 December, 2011 between RGHPCL, CHPCL and EPF.

Share Structure

Chilime Hydropower Company	33%
Nepal Electricity Authority	18%
Project-affected Local People	10%
Employees of the Promoters	3.5%
Employees of EPF	1%
Depositers of EPF	19.5%
General Public	15%
Total	100%

Madhya Bhotekoshi Jalavidhyut Company Limited (MBJCL)

It is a subsidiary company of Chilime, registered as public company in july 2010. MBJCL has planned to develop Middle Bhotekoshi Hydroelectric Project (MBKHEP) with an installed capacity of 102 MW in Sindhupalchowk district of Central Development Region.

Tri-partite loan agreement has been signed between EPF, Chilime and MBJCL for debt portion. The equity investment will be made through 51% promoter share and 49% public share. Chilime is a leading company with 38% share.

Employees of EPF will get 1 percent public share in this project too.

These projects are A Grade projects in Nepal. The share price of these companies will be very high when listed in Nepal Stock Exchange. To give you a rough idea, the share price of Upper Tamakoshi is expected to trade at NPR 3,000 (NPR 100 is the par value). So, I believe the next overnight millionaire will the staffs of EPF.