Super Madi Hydropower looking to raise bank facilities worth Rs.5.75 Arba; Care Ratings grades the issue

CARE Ratings Nepal Ltd. (CRNL) has assigned Rating of ‘CARE-NP BB’ to the long term bank facilities worth NPR 5602.50 Million and ‘CARE-NP A4’ to the short term bank facilities worth NPR 150 Million of Super Madi Hydropower Limited (SMHL).

Key Rating Weakness:

• Project implementation risk and stabilization risk as the project is in initial stage of construction.
• Exposure to fluctuation in foreign currency exchange rates along with volatile interest rate.
• Hydrology risk associated with run-of-the-river power generation.

Key Rating Strengths:

• Board and management team having prior experience in executing hydropower project.
• Power purchase agreement with sufficient period coverage.
• Moderate counter party risk.
• Low estimated cost per MW coupled with financial closure achieved for estimated debt and ~58% of equity has been injected.
• Shortage of power in the country.
• Government support for the power sector.
• Low power evacuation risk.

SMHL is a Public limited company, incorporated on January16, 2009. The company is developing 44 MW run-of-river, Super Madi Hydropower Project (SMHP) in Kaski district of Nepal. The project is proposed to utilize available head and flow from Madi Khola (river). It is promoted by institutional as well as individual promoters from different background. The major shareholder of the company as on October 17, 2019 are Mr. Pushpa Jyoti Dhungana (21.13% stake), CG Energy Infrastructure Pvt. Ltd. (13.65% stake), Madi Investment Pvt. Ltd. (7.83% stake), Mr. Raghunath Puri (6.75% stake), and Mr. Mitra Pasad Kafle (5.75% stake). The project is constructed under BOOT (Build, own, Operate and Transfer) mechanism. As per the Generation License, obtained on March 30, 2017 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