ICRA Nepal assigns LB+ to the long-term loan of Yambaling Hydropower

ICRA Nepal has assigned a long-term rating of [ICRANP] LB+ (pronounced ICRA NP L B plus) to the proposed long-term loan of Yambaling Hydropower Private Limited (YHPL).

Credit strengths

• Low tariff risk, given presence of long-term PPA at predetermined tariff rates and escalations
• Low offtake risk on the back of PPA, current demand-supply gap and increasing energy utilisation
• Prior experience of promoters can help development of current project
• Lower project cost and higher dry energy mix to support return and debt coverage indicators

Credit challenges

• High project execution risk may pose challenge in completing the project within the budgeted cost and estimated timeline
• High funding risk with financial closure yet to be achieved; ~35% promoters’ equity injection so far
• Evacuation risks remain high with NEA’s Barhabise substation in construction phase
• Tariff escalation loss on expected delay in project completion though same might be avoided if RCOD is extended
• High hydrology risks emanate from ungauged rainfed river with low catchment area and lack of deemed generation clause in PPA

About the company   

Yambaling Hydropower Private Limited (YHPL) was incorporated on November 21, 2007 as a private limited company. Its paid-up capital, as of mid-September 2019, was ~NPR 125 million (of which ~NPR 76 million has been certified by the Office of Company Registrar in March 2019), fully held by the promoters. The major shareholders include Ms. Indramaya Tamang (21%), Money Plant Investment Private Limited (20%), Mr. Kaman Singh Lama (8%) and Mr. Uttam Rajbhandary (8%). YHPL is developing the 7.27-MW Yambaling Khola HPP in Sindhupalchowk district, Province 3 of Nepal at a budgeted cost of NPR 1,200 million at a debt:equity ratio of 70:30. The project is a run-of-river (R-o-R) type and is being developed at 40% probability of exceedance (Q40). The contract PLF is ~59% with an annual production capacity of ~38 GWh of energy with a dry energy mix of ~18%. The major promoters are also operating the 5-MW Pikhuwa Khola Small Hydropower Project under Eastern Hydropower Limited.

Source: ICRA Nepal