IPO Analysis of Api Power Company Ltd. Good Opportunity for Investors.

Api Power Company Ltd. was established in 2060/03/05 under the Company Act 2063 as a private company. It was later converted into a public company on 2070/04/06. The company has its registered headquarters in Trade Tower, Thapathali, Kathmandu. The objective of the company is to generate electricity through utilization of water and other natural resources available in the country. The company was established by the same promoters of Arun Hydropower Company Ltd. The company is developing an 8.5 MW Naugarh hydro electricity project. The project was expected to begin commercial operation from Chaitra 2071.

A Power Purchase Agreement (PPA) was signed on 2067/01/19 (2nd May, 2010) with the NEA. According to the PPA, Api Power Company will be paid Rs.4 per kWhr in wet season and Rs.7 per kWhr in the dry season. The rates are to be escalated by 3% each year for 9 years. The Power Generation License has been obtained from the Ministry of Energy on 2069/03/31 which expires on 2104/03/30.

The cost of the project is estimated to be Rs.1.4 billion of which 70% (Rs.980 million) is being funded through debt and the remaining 30% (Rs.420 million) through equity.

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