Taksar Pikhuwa Khola Hydropower looking to raise long term banking facilities worth Rs.12 Crore; Care Ratings rates the facility ‘CARE-NP BB’

Care Ratings Nepal (CRNL) has assigned rating of ‘CARE-NP BB’ to the long term bank facilities worth Rs.1,200 Million of Taksar Pikhuwa Khola Hydropower Private Limited (TPKH).

TPKH is a Private company, incorporated as on April 23, 2014. It is promoted by individual promoters from different background for setting up of an 8 MW run-of-river, Taksar Pikhuwa Khola Hydropower Project (TPKHP) in Bhojpur district of Nepal. The power project is proposed to utilize available head and flow from Pikhuwa Khola (river). The estimated cost of the project is Rs 1720 Million which is proposed to be financed in Debt equity ratio of 70: 30.

The ratings assigned to the bank facilities of Taksar Pikhuwa Khola Hydropower Private Limited (TPKH) is constrained by project implementation risk including the power evacuation risk and stabilization risk there after given its initial stage of construction. The ratings are also constrained by TPKH relatively high project cost estimates, its 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 the project, receipt of all the major approvals for the construction of the project, shortage of power in the country and government support for the power sector.

The ability of TPKH to timely complete the project within the projected Required Commercial Operation Date (RCOD) without any time or cost overrun and availability of sufficient hydrology and timely receipt of the payments from NEA are the key rating sensitivities.