Listed Hydropower companies has mopped up more than Rs.1 Kharba worth of funds from the market as per latest quarterly reports

Sun, Dec 15, 2019 10:20 AM on Exclusive, Financial Analysis,

Nepal has very few natural resources that can provide the required amount of energy. One such resource is abundance of water bodies. The energy harnessed from water bodies can meet the energy demands of the nation. For this purpose, hydropower plants are put in place to generate ample electricity. Nepal has great potential in the hydropower sector which is why it is in the process of becoming among popular investment options.

However, setting up a hydropower plant requires huge amount of funds. Additionally, there are minimal or no returns for the first couple of years. After the plant is capable enough to generate and sell its electricity, revenue is generated and used to adjust previous year losses. Finally, the project starts to generate returns for the investors. For investment, these hydropowers look towards banks for loans and towards the public through IPO.

As a result, huge amount of funds are locked in for a long period of time. A list has been prepared depicting the amount of paid up capital and long term borrowings of each listed hydropower company. For that purpose, the latest quarterly reports of the companies have been referred.

Out of a total of 32 listed hydropower companies, Ghalemdi Hydro Limited (GHL) and Joshi Hydropower Limited (JOSHI) have not published any quarterly reports after going public. Third quarter report of Panchakanya Mai Hydropower (PMHPL) and fourth quarter report of Barun Hydropower (BARUN) FY 75/76 were the latest available reports. First quarter reports FY 76/77 have been considered for the rest of the companies.

In terms of paid up capital, a total of Rs.49.64 Arba has been locked as investments in the hydropower industry and the industry has a combined long term borrowings of Rs.66.58 Arba. In total, a sum of Rs.1.16 Kharba has been mopped up by the hydropower industry. The list is topped by Upper Tamakoshi Hydropower (UPPER) with paid up capital of Rs.10.59 Arba and borrowings of Rs 32.40 Arba. As a result, huge amount of investment depends on the efficient and consistent functioning of the hydropower plants.