Mathilo Mailun Khola Jalvidyut Limited looking to obtain bank facilities worth Rs.1.96 Arba; Care Nepal rates the issue

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB-’ to the long-term bank facilities worth NPR 1875 Million and ‘CARE-NP A4’ to the short-term bank facilities worth NPR 90 Million of Mathillo Mailun Khola Jalvidhyut Limited (MMKJL).

The ratings assigned to the bank facilities of MMKJL is constrained by project implementation risk and stabilization risk thereafter given its initial stage of construction including the power evacuation risk and MMKJL’s exposure to regulatory risk. The rating is also constrained by MMKJL’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 counter party risk. The ratings also factors in achievement of financial closure for estimated project cost, MMKJL’s association with the group having experience in hydropower projects, shortage of power in the country and government support for the power sector.

The ability of MMKJL 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.

Mathillo Mailun Khola Jalvidhyut Limited (MMKJL) is a Public Limited company, incorporated as on August 14, 2012. It is promoted by institutional investors majorly related to Sanima Hydro group and other institutes which includes Banks and Investment companies for setting up of a 14.3 MW run-of-river, Mathillo Mailun Khola Jalvidhyut Project (MMKJP) in Rasuwa district of Nepal. The major shareholder of the company as on May 27, 2019 are Sanima Mai Hydropower Ltd. (38.53%) and Molnia Power Ltd (24.28%). 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 January 04, 2013, the project shall be handed, on whatever conditions the project is, to the Government of Nepal after expiry of Generation License.

Source: Care Ratings Nepal