Long term and short term bank facilities of Swet Ganga Hydropower worth Rs.4.31 Arba get rated by Care Ratings

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB’ to the long-term bank facilities worth NPR 4192.88 Million and ‘CARE-NP A4’ to the short-term bank facilities worth NPR 120 Million of Swet Ganga Hydropower & Construction Limited (SGHCL).

The ratings assigned to the bank facilities of SGHCL is constrained by project implementation risk and stabilization risk thereafter given its initial stage of construction including the power evacuation risk and SGHCL’s exposure to regulatory risk. The rating is also constrained by SGHCL’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, presence of power purchase agreement (PPA) with sufficient period coverage and moderate counterparty risk. The ratings also factors in achievement of financial closure for estimated project cost, strong institutional promoter group, shortage of power in the country and government support for the power sector.

The ability of SGHCL to timely complete the project without any time or cost overrun and availability of sufficient hydrology and timely completion of transmission infrastructure are the key rating sensitivities.

Swet Ganga Hydropower & Construction Limited (SGHCL) is a Public Limited company, incorporated as on February 18, 2005 as a Swet Ganga Hydropower & Construction Private Limited and changed to public limited on September 28, 2016. It is promoted by individual promoters from different background, institutional investors majorly related to Sanima Hydro group and other institutes which includes Banks and Investment companies also for setting up of a 28.1 MW (2x14.05 MW) run-of-river, Lower Likhu Hydropower Project (LLHP) in Ramechhap district of Nepal. The major shareholder of the company as on July 8, 2019 are Sanima Mai Hydropower Ltd. (44.33%) and Dolma Impact Fund-I (31.60%). 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 April 10, 2016, 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