Ankhu Hydropower Private Limited looking for bank facilities worth Rs.4.63 Arba; Care Ratings grades the issue

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB-’ to the long term bank facilities worth NPR 4500 Million and ‘CARE-NP A4’ to the short term bank facilities worth NPR 130 Million of Ankhu Hydropower Private Limited (AHPL).

The ratings assigned to the bank facilities of AHPL are constrained by project implementation risk and stabilization risk associated with the project, given its initial stage of construction, and power evacuation risk related to the transmission of power. The rating is also constrained by exposure to volatile interest rates, exposure to regulatory risks and hydrology risk associated with run-of-the-river power generation.

The ratings, however, derive strength from experienced board members and management team along with association with group having multiple hydropower projects. The ratings also factor in power purchase agreement (PPA) with sufficient period coverage, moderate counter party risk, financial closure achieved for major portion of debt component, shortage of power in the country and government support for the power sector.

Ability of the company to timely execute the project without any time or cost overrun, timely completion of transmission infrastructure, availability of sufficient hydrology and timely receipt of the payments from Nepal Electricity Authority (NEA) are the key rating sensitivities.

Ankhu Hydropower Private Limited (AHPL) was incorporated on June 28, 2001 as a private limited company. It is promoted by institutional as well as individual promoters for setting up of 34MW run-of-the-river Ankhu Hydropower Project in Dhading district of Nepal. Currently, share capital of the company is held by promoter shareholders where Mr. Gyanendra Lal Pradhan (holds 90.99%), Mr. Kersingh Tamang (holds 3%) and Mr. Gait Tamang (holds 3%) are major three promoter shareholders of the company. The project is constructed under BOOT (Build, Own, Operate and Transfer) mechanism. As per the Generation License, from Government of Nepal –Ministry of Energy, obtained as on February 10, 2017, the project shall be handed, on whatever conditions the project is, to the Government of Nepal after expiry of Generation License.

Source: Care Ratings Nepal