Care Ratings assigns average ratings to long term bank facilities of Asian Hydropower Private Limited

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB’ to the long-term bank facilities of Asian Hydropower Private Limited (AHPL) worth NPR 870.34 Million.

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

The rating, however, derives strength from board members and management having experience in hydro power sector, strong promoter group having experience in construction business and moderate counter party risk. The ratings also factors in achievement of financial closure for estimated project cost, presence of power purchase agreement (PPA) with sufficient period coverage, shortage of power in the country and government support for the power sector. The ability of AHPL to timely complete the project within the projected Required Commercial Operation Date (RCOD) without any time or cost overrun and availability of sufficient hydrology are the key rating sensitivities.

Asian Hydropower Private Limited (AHPL) is a Private Limited company, incorporated as on May 05, 2016. It is promoted by individual promoters from different background and institutional investors for setting up of a 6.2 MW (2x3.64 MW) run-of-river, Lower Jogmai Khola Hydropower Project (LJKHP) in Illam district of Nepal. The major shareholder of the company as on June 14, 2019 are Mrs. Mangala Amatya (~25%), CE Construction Private Limited (~18%) and Urja Developers Private Limited (~15%). 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 27, 2019 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.

Source: Care Ratings Nepal