The world is watching to see whether the returns compensate for 'political risk' of investing in Nepal

Nepal's small and medium sized companies have growth potentials but often lack capital and skills to invest. Dolma Impact Fund (DIF), which was founded in September 2014, is helping has been providing capital and expertise to such companies. It is the only international private equity fund focused purely on Nepal. It has so far raised US$ 26 million for the purpose. 

Energy ministers’ new commitment.

The newly elected deputy prime minister and energy minister Mr. Top Bahadur Rayamajhi has recently expressed his verbal commitment to provide equal treatment between domestic (private), NEA's projects and foreign funded projects. Let's find out what additional benefits NEA and foreign funded projects are getting at the moment.

Dollar PPA: Reasons for and against it

In my previous post, I wrote about what we lose if we do "dollar denominated PPA for 15 years from COD for up to 55 percent of total payment." I concluded that Nepal ends up paying an additional amount of NRs. 71.16 million per MW.

IPO of Ngadi Group Power Limited

Ngadi Group Power Limited is the next hydropower company that is going to be listed in Nepal Stock Exchange. Here is my sincere opinions regarding the company, its project and speculated share price when listed in Nepal Stock Exchange.

Impact of dollar PPA when Nepali Rupee is depreciating at an alarming rate.

No sane foreign investor will invest in Nepal's hydro without dollar PPA. It is crystal clear. 

Reality check

The border blockade that strangled Nepal’s fuel supply has pointed out the need for energy security. A lot of articles have been published on the newspaper advocating the importance of hydropower construction for the self sufficiency. By reading the suggestions and recommendations made by our experts, it creates a sort of illusion to me. The path to transform this energy deficit country into a surplus country seems very easy. 

New directive for hydropower licensing

Government of Nepal is preparing a new directive for hydropower licensing related to the projects that are in government’s basket. There are 210 hydropower projects with a total capacity of 10,125 MW, according to Department of Electricity Development (DoED). These projects are actually the cancelled hydropower projects. They were previously developed by government, foreign investors and local developers. One of the main reasons for the cancellation was the failure to meet the deadlines.

Central Banks’ new directive and its impact on hydropower financing.

Nepal Rastra Bank NRB (Central Bank of Nepal) has increased the capital requirement by four times for the commercial banks (NPR 8 billion from NPR 2 billion). The decision to increase the paid up capital within two years is not only applicable for commercial banks but also for development banks and finance institutions.

Lack of forex risk protection could dissuade hydro investors

Foreign investors, who pour money into country’s hydroelectric sector without assurance of foreign exchange (forex) risk protection, stand to incur losses to the tune of 26 per cent of project’s capital cost, says a latest report prepared by Deloitte, one of big four consulting firms in world.

High time to use water resources to reduce Nepal’s dependence on India

Finally, the much awaited constitution is with us. This could be the end of political deadlock that we have been facing for decades. Most of us, including me, are hopeful that this constitution will bring peace and prosperity.

PPA in US dollar is a hot debate again

Another committee has been formed to address the solution for PPA in US dollar after 14 months since the previous committee could not complete the task. PPA in US dollar is always a sensitive issue. The past experience of NEA regarding dollar PPA is horrible. This is the main reason why NEA and Nepal Government always hesitate to sign dollar PPA again.

Unwillingness of NEA

The unbundling of NEA has started. But it is now facing a problem from its employees. The formation of National Transmission Grid Company (NTGC) which is planned to sort out the entire problem in transmission line is not getting support.

InvestBank Acquires Equity Stake In Asian Hydroelectric Projects

LAS VEGAS, Sept. 1, 2015 - InvestBank Corp., the global investment bank headquartered in the United States of America, has acquired a 70% equity stake in the 440 MW Tila-1 hydroelectric project and the 420 MW Tila-2 hydroelectric project in the South Asian country of Nepal.

No wonder NEA records a net loss again‏

The fiscal year 2071/72 is over and the financial statements from various companies are arriving every day. 

ADB plans to fund 3 power projects in Nepal

The Asian Development Bank (ADB) has said it plans to finance three major power projects — two hydropower plants and a new Nepal-India cross-border transmission line — in the next few years.

The two hydropower storage-type projects are the 300 megawatt Dudh Koshi Hydropower Project and the 410 megewatt Nalsing Gadh Hydropower Project.

Doesn’t look cheap as it seems.

HIDCL is expecting to get $50 million soft loans from ADB. I had been to HIDCL recently and met the high ranking officials to discuss their plans regarding the ADB loan.

United Modi Hydropower Limited: IPO analysis.

United Modi Hydropower Ltd. is a registered public limited company established under the companies Act 2063 of Nepal, with an objective of promoting hydropower in Nepal through private investment.

Madhya Bhotekhoshi Jalavidyut Company Limited

Madhya Bhotekoshi Jalavidhyut Company Limited (MBJCL) 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.

Singati signs funding pact

KATHMANDU, AUG 08 - Singati Hydro Energy on Friday signed an agreement with financial institutions for the construction of the 16MW Singati hydropower project based at Waware of Dolakha district.

Belgian Investment Company (BIO) in Nepal.

Finally, Belgian Investment Company for Developing Countries (BIO) has entered into Nepalese hydropower.

Sanjen Jalavidhyut Company Limited

Sanjen Jalavidhyut Company Limited (SJCL) is a subsidiary of Chilime and was incorporated in February 2010 as a public limited company. 

Rasuwagadhi Hydropower Company limited.

The company 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.

Nagarjun Trip

Starting point:- Near Balaju Baaisdhara- roughly 1,350m above sea level.

Feedback on draft constitution by IPPAN

Independent Power Producers' Association, Nepal (IPPAN) has submitted the feedback on "Preliminary Draft of New Constitution, 2015" to Subash Chandra Nembang, chairman of Nepalese Constituent Assembly. Here are the feedback.

Is it just a mere coincidence?

In recent time, Rs. 160 million per MW has become a rule of thumb. Any project above Rs. 160 million per MW seems to be less attractive. Thus, Rs. 160 per MW can be regarded as a threshold for the current PPA rates with a design discharge of Q40%.

U.S. Government Supports Expansion of Nepal’s Hydropower

The U.S. Embassy, through the U.S. Agency for International Development (USAID), today announced the launch of the Nepal Hydropower Development Project (NHDP). This five-year, $9.8 million project implemented by Deloitte Consulting LLP will support Government of Nepal efforts to expand the country’s access to modern, high-quality hydropower services and become an energy exporter in South Asia.

Demand, problem and criticism of private sector

Private sector (domestic and foreign) has done a commendable job. It has been generating hydro-electricity for twenty years. Now, it contributes about 35% of the total hydro-electricity. The rest comes from the government that started generation more than 100 years ago. Many major projects initiated by private sector are underway.

Energy sector attracts Rs54b in FDI pledges

With some landmark agreements over the last few years, energy has become the most lucrative sector in Nepal for foreign direct investment (FDI).

Lurking in the shadows of the earthquakes.

Several hydropower projects that were affected by the powerful April 25 earthquake are now repairing the damages. While the physical damages are getting rebuild slowly, hydro business is about to face some more obstacles.

Breakthrough or anit-national?

There are no export oriented projects in operation as of now. But the PDA with GMR (an Indian company developing 900 MW Upper Karnali project) is suddenly in the limelight. Some experts are claiming to be an anti-national deal while others calling a breakthrough.

Earthquake tremors felt in hydropower share price is slowing down.

The market, which opened on 24^th May, 2015 after remaining closed for almost a month after the April 25 earthquake continued to lose points for the first week. Of the nine trading groups, hydropower saw a massive decline as expected.

NEA did it again.

NEA has recently signed PPA with Nyadi Hydropower Limited, a subsidiary of Butwal Power Company (BPC). Nyadi Hydropower Limited is developing a 30 MW project in Lamjung district. According to the press release, NEA will buy energy at NPR 4.80 and NPR 8.40 per kWh during wet and dry season respectively. The developer is entitled to get three percent escalation for eight years.

Insane sweat equity by our private hydropower developers.

It requires a tremendous amount of time, money and effort to reach the project at operational level from inception. So many risks along with a deep fear of uncertainty always exist. These risks have to be borne by the developers. 

Hydropower Development Policy, 2001

Hydropower Development Policy, 2001

Locally constructed projects vs. foreign/multilateral funded projects

In a quest to find out how foreign investors work, I managed to find out some striking statistics that completely blew me away. Here is a comparison of “Locally constructed projects vs. foreign/multilateral funded projects.”

Earthquake damages over dozen hydropower projects

Generation of 150 MW affected

Earthquake aftermath and ways to move forward.

Mother Nature can be destructive.

Nepal is dealing with a catastrophic damage after the massive 7.8 magnitude earthquake. Thousands of people died and millions are now homeless. Nepali officials fear the death toll may rise above 10,000. Thousands of homes and buildings, including historical landmarks, in Kathmandu have been leveled up. 

Income Tax Act

The Financial Act, 2011 (formerly the Income Tax Act 2002) addresses the charges, taxes, duties, and fees relating to revenue administration of the GON.

Income Tax Act  Download the pdf version

Water Resources Act

The Water Resources Act, 1992 was established to promote the optimum utilization, conservation and development of Nepal's water resources, including surface water or underground water, and to make timely legal arrangements for determining beneficial uses of water resources, preventing environmental and other hazardous effects, and keeping water resources free from pollution.

Water Resources Act Download the pdf version

Foreign Investment and Technology Transfer Act

The Foreign Investment and Technology Transfer Act, 1992 was formulated to promote the maximum mobilization of limited capital to increase the competitiveness of Nepal's human capital and natural resources. The act was amended and enacted in August 2000.

Foreign Investment and Technology Transfer Act  Download the pdf version.

Company Act

The Company Act 2006 was amended and enacted in August 2007. The act aims to foster dynamic economic development by promoting investment in industry, trade and business. Download the pdf version.
Company Act 

Electricity Act

In order to develop electricity power by its generation, distribution as well as to standardize and safeguard the electricity services, the Electricity Act 1992 has come into force since then.

Electricity Act Download the pdf version.

Foreign Investment and One-window Policy

The Foreign Investment and One-Window Policy, was formulated in 1992 in order to increase private sector participation and generate additional opportunities for income and employment, particularly in the area of industrial production. The policy aims to increase productivity by importing foreign capital and modern technology management and skills to increase the competitiveness of Nepalese industries in international markets.

Foreign Investment and One-window Policy Download the pdf version

The darker side behind the IPOs and a neglected rule.

Hydropower IPOs is generally well received and always oversubscribed by many times in Nepal. The phenomenon can be analyzed from two straight dimensions. 

Problem in investment on promoter shares by commoners in lack of law

KATHMANDU, April 5: Commoners seem to be interested to invest in promoter shares of hydropower projects but their hands have been tied in lack of legal provisions. A few hydropower developers have been indirectly collecting promoters’ investment from commoners on the basis of their background but there are no legal provisions to give continuity to that.

It is big and it is coming: HIDCL’s IPO

It may come as a surprise to some that HIDCL is going to do the largest IPO in the history of Nepal since many of us do not clearly know what HIDCL is all about. Here is my review of HIDCL and its upcoming IPO.

IPO Agreement between NIBL Capital Markets Ltd. and Garjang Valley Hydropower Ltd.

NIBL Capital Markets Limited, a subsidiary of Nepal Investment Bank Limited, has signed an agreement with Garjang Valley Hydropower Ltd. for its IPO. NIBL Capital Markets Ltd. will be the issue manager.

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. 

PTC India offers Nepal help to set up power trading firm.

New Delhi: Power trader PTC India Ltd has offered to set up a state-owned power trading organization to maximize the benefits of electricity commerce in Nepal—part of a region where energy security has become increasingly important to development efforts.

Unethical business practice.

My attention was drawn by an unethical business practice done by Sahas Urja. It has published a notice on ww.sharesansar.com

Target 7-nation power grid

A Bimstec meeting yesterday finalised a draft deal to set up power grid connections for electricity trade among its seven member countries -- Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand.

Upper Tamakoshi Hydropower Project and Its IPO; Fully Explained

Here is my speculation and the review of Upper Tamakoshi Hydro Electricity Project.

Unbundling of NEA starts

KATHMANDU, Feb 23: The government has started unbundling of the Nepal Electricity Authority (NEA) deeming that development of energy sector suffered while generation, transmission and distribution/sale of electricity were handled through a single body.

IndusLaw, Shearmans, Clifford Chance, Nepal firm on $140m hydropower financing

IndusLaw, Shearman & Sterling and Neupane Law Associates advised the Dutch development financing institution, FMO and a consortium of lenders on the $142.5m financing of the proposed 82 MW Nepalese Lower Solu hydropower project.

IFC to hold energy event on March 5

KATHMANDU, FEB 22 - The International Finance Corporation (IFC) will host a one-day event on Nepal’s energy sector on March 5 in the Capital.

Nepal IPB approves development of hydropower projects

The Nepal Industrial Promotion Board (IPB) has approved the development of hydropower projects in the county.

Overwhelming response by the residents of Darchula and Baitadi districts.

Api Power Company Limited floated 10 percent of its issued capital to the local residents of Darchula and Baitadi districts, a mandatory requirement by Government of Nepal. These two districts are located in far western region of Nepal. Api Power Company Limited offered one million shares at Rs 100 each.

Upper Khimti hydropower project completes financial closure

Himalaya Urja Bikash Company, developer of 12MW Upallo Khimti Hydropower Project, has completed financial closure of the project.