Care Ratings Nepal assigns Grade 4 rating to the upcoming IPO of Greenlife Hydropower; Company to issue 36 lakh units IPO shares

Care Ratings Nepal has assigned Grade 4 rating to the upcoming IPO issuance of Greenlife Hydropower Limited. The grade 4 rating indicates Below Average Fundamentals. The hydropower company is issuing 36 lakh unit shares as the initial public offering worth Rs 36 crore.

The promoter group of the company has limited prior experience of executing power projects and the project under consideration is the first power project with 40 MW capacity being implemented by the company. The initial estimated cost for 25MW was Rs 3,338 million which has been escalated to Rs 4,936 million mainly due to increase in IDC on back of delay in completion of the project and increase in cost of electro mechanical works due to increase in foreign exchange rate. GHL is proposed to utilize discharge from Khani Khola, Hanapu Khola and Napke Khola, which are snow fed streams, comprising of mountainous terrain with steep hill slopes. Hence, the project is exposed to risk associated with variation in discharge of water from the aforesaid river/khola.

GLH had entered into a long term PPA with NEA as on October 10, 2010 for sale of 25MW power which was amended to 40MW on June 4, 2017. The financial closure for 25MW at revised cost estimates of Rs.4936 million is completed and the same is proposed to be financed in debt equity ratio of 66:34 with debt sanctioned from bank amounting to Rs 3,267 Mn loan.

GHL was incorporated as on September 20, 2009 as a Greenlife Energy P Ltd. and the name of the company was changed to present name as on June 23, 2017. It is promoted by individual promoters from different background as well as investment companies for setting up of a 40 MW run-of-river, Khani Khola 1 Hydropower Project in Dolakha district of Nepal. The power project is proposed to be constructed in two phases. In the first phase, the generation capacity will be 25 MW by utilizing available head and flow from Khani Khola which will be upgraded to 40 MW in the second phase.