Sanima Middle Tamor Hydro Power project sets to borrow long term bank facilities wort Rs 9.5 Arba: CARE rating assigns CARE-NP BB rating

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB’ to the long-term bank of Sanima Middle Tamor Hydropower Limited (SMTHL). SMTHL is set to borrow Rs 9.5 Arba.

Instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations, in Nepal.

The ratings assigned to the bank facilities of SMTHL is constrained by project implementation risk including the power evacuation risk, financial closure yet to be achieved for partial project cost and stabilization risk thereafter given its initial stage of construction. The rating is also constrained by SMTHL’s exposure to volatile interest rates and hydrology risk associated with run of the river power generation.

However, 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 SMTHL’s association with the group having experience in hydropower projects, shortage of power in the country and government support for the power sector.

Sanima Middle Tamor Hydro Power Ltd (SMTHL) is a Public Limited company. It is promoted by individual promoters from different background, institutional investors majorly related to Sanima Hydro group and other institutes which includes Banks and Insurance companies for setting up of a 73 MW (4x18.25 MW) run-of-river, Middle Tamor Hydropower Project (MTHP) in Taplejung district of Nepal.

Source: Care Rating Nepal