Upper Hewakhola Hydropower sets to borrow long term bank facilities worth Rs 98.65 Crore; CARE rating assigns CARE-NP BB- rating

Care Rating Nepal Limited has assigned rating of CARE-NP BB minus to the long term bank facilities of Upper Hewakhola Hydropower Company Limited (UHHCL). UHHCL is set to borrow the loan of Rs 98.65 crore.

The instrument with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations in Nepal. The instrument of UHHCL reflects comparatively low standing within the category.

The rating assigned to the long term bank facilities of UHHCL is constrained by project implementation risk including stabilization risk and power evacuation risk thereafter given its initial stage of construction. Other constraints are significant time overrun in the project and exposure to volatile interest rates.

However, the rating assigned to instrument derives strength from experienced board members and management team. UHHCL had entered into a power purchase agreement (PPA) with Nepal Electricity Authority (NEA). Shortage of power in the country and government support for the power sector are opportunities for UHHCL.

UHHCL is a public company. It is promoted by institutional as well as individual promoters from diferent background for setting up of 8.5 MW run-of-the-river upper Hewakhola Small Hydropwer Project in Sankhuwasabha district of Nepal.   

Source: Care Rating Nepal