Care Ratings assigned Double B rating to Suri Khola Hydropower Limited Rs 76 crore long term loan facility
Wed, Jun 10, 2020 4:52 PM on Credit Rating, Latest,
CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB’ to the long-term bank facilities of Suri Khola Hydropower Limited (SKHPL).
The ratings assigned to the bank facilities of SKHPL is constrained by project implementation and stabilization risk including the power evacuation risk and significant time overrun of the project. The rating is also constrained by SKHPL’s exposure to volatile interest rates, exposure to regulatory risk, hydrology risk associated with run of the river power generation and negative impact of Covid-19 Pandemic on the project. The rating, however, derives strength from board members and management having experience in hydro power sector, strong institutional promoter and moderate counter party risk. The ratings also factor in achievement of financial closure for full project cost, presence of power purchase agreement (PPA) with sufficient period coverage, demand supply gap in Nepal coupled with increasing demand of power in the country and government support for the power sector. The ability of SKHPL to timely complete the project without any time or cost overrun and timely completion of transmission infrastructure are the key rating sensitivities.
Key Rating Weaknesses
- Project implementation risk and stabilisation risk
- Power evacuation risk
- Significant time overrun of the project
- Exposure to volatile interest rate
- Hydrology risk associated with run-of-the-river power generation
- Exposure to regulatory risk
- Impact of Corona Virus on the Project
Key Rating Strengths
- Board members and management having experience in hydro power sector
- Strong Institutional Promoter
- Financial closure achieved for the full project cost
- Power purchase agreement with sufficient period coverage
- Moderate counter party risk
- Power demand & supply gap coupled with increasing demand of power in the country
- Government support for the power sector
About the Company
Suri Khola Hydropower Limited (SKHPL) is a Public Limited company, incorporated on December 02, 2008 as a Suri Khola Hydropower Private Limited and changed to public limited on July 02, 2018. It is promoted by individual promoters from different background and institutional investors for setting up of a 6.4 MW run-of-river, Suri Khola Hydropower Project (SKHP) in Dolakha district of Nepal. The major shareholder of the company as on February 23, 2020 are Dolma Impact Fund-I (48.19%) and Mr. Himal Gurung (42.50%).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 June 07, 2015 the project shall be handed, on whatever conditions the project is, to the Government of Nepal after expiry of Generation License, which is 35 years.
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