HIDC earning interest as it awaits NRB nod
KATHMANDU, FEB 27 -
Hydroelectricity Invest-ment and Development Company (HIDC) has been earning interest on its capital amounting to more than Rs 5 billion instead of using it to finance hydropower projects as it has not received the go-ahead from Nepal Rastra Bank (NRB).
Rs 5.68 billion out of its paid-up capital of Rs 6 billion has been deposited in fixed deposits in 19 commercial banks while the rest of the money has been deposited in the central bank. “We have earned interest amounting to around Rs 400 million by depositing our money in various banks,” said Ejendra Prasad Luitel, coordinator of the company’s management team. “The money was deposited for a period of six months until the company could begin work after getting the central bank’s approval.”
HIDC is in the final stages of completing the paperwork which entails submitting its investment and recovery policy, resource collection guidelines and financial and purchase guidelines to the central bank.
“Fulbright Consultancy, which has been assigned to prepare the documents, will be presenting the final documents within this week; and we will submit them to NRB within mid-March,” said Luitel, who was deputed by the central bank to head the company temporarily. “NRB will not take much time to give its approval after that.”
HIDC plans to call hydropower developers to apply for funds for their projects after it comes into operation when it gets the central bank’s approval. “A few projects have already requested us for capital,” said Luitel. “We have told them that we will look at their proposal after the central bank gives the okay to do business.”
It has been seven months since HIDC was established, and it is yet to get its chief executive officer, preventing it from moving ahead at full speed. The company’s day-to-day affairs are being handled by a management team, which is a temporary mechanism.
Against this backdrop, HIDC first deposited its money for a six-month period in fixed deposit accounts in diverse banks. With most of the deposits maturing, it has planned to extend them for another six months as it looks like it will be a while before it starts financing hydro projects.
According to HIDC, Citizens Investment Trust and Rastriya Beema Sansthan are also putting Rs 100 million and Rs 200 million respectively in the company, although they had initially promised to invest Rs 1 billion each. This means the company will have to invest in more fixed deposits.
“We are now negotiating with three banks to renew our deposits for an additional six months,” said Luitel. “We will ask other banks to quote new interest rates to renew the deposits. He added that the company would withdraw its funds from banks which quote less than its minimum demand.
According to HIDC officials, banks have not been offering more than 8 percent although it had been earning 12 percent interest on its existing deposits. Banks have been attempting to keep the interest rate as low as possible with the financial system awash in liquidity amid a suppressed credit demand.
Source: Kantipur
