Lower Khare Khola Project to run in full fledge by Baisakh; CEDB hydro is issuing preference share for Lower Khare Hydro Power Project; annual return 7.5 percent

Mon, Apr 18, 2016 3:29 PM on Latest, Featured, Interview,
ShareSansar.com met Vinay Bhandari, CEO of  CEDB Hydro Fund  to find out about the Lower Khare Khola Project  and also the future plans of CEDB Hydro Fund. Mr. Bhandari is an Electrical Engineer with over 21 years of experience in the design, development and operations of hydropower projects. 1. Tell us briefly about CEDB Hydro Fund. CEDB Hydro Fund (CHF) is a public company. CHF was established 6 years ago by Clean Energy Development Bank in order to develop and operate hydropower projects in Nepal. As a Development Bank, Clean Energy Development Bank had a mandate to provide loans to the customers for  economic development of the country but there should be customers to take loan and make an investment. Especially if the bank had to provide loan in the hydropower sector there has to be a trustable companies ready to take loan and invest in the hydropower sector. After realizing the need of the company ready to invest in hydropower sector, Clean Energy Development Bank made an effort to established CEDB Hydro Fund. CEDB Hydro Fund has successfully completed 4.4 MW Radhi Hydro Power Project, 4 MW Khudi Hydro Power Project and 1.83 KW Syange Hydro Power Project in Lamjung District and is initiating several other hydro projects like 11MW Lower Khare Khola Hydropower Project, 10.3 MW Dordi Khola Hydropower projects, and 5 MW Rukum Gad Hydro Power Project.   2. What is the relation between CEDB Hydro Fund and Universal Power Company? What is the area of function of Universal Power Company? Universal Power Company Limited is a subsidiary company or we can also say it is a special purpose vehicle of the CEDB Hydro Fund  to develop hydropower projects. CEDB hydro fund  holds 88% share of the Universal Power Company. At present, it is developing 11 MW Lower Khare hydropower project located at Suri, Chankhu and Khare VDCs of Dolakha District which is about 175 km east from Kathmandu. 3. Does CEDB Hydro Fund   have any other projects under it? As I have told you earlier, at present we are developing Lower Khare Khola Hydropower project  located at Suri, Chankhu and Khare VDCs of Dolakha District which is about 175 km east from Kathmandu. The construction of the Lower Khare hydropower project  will start from Baishak this year. The project has already received Generation license of 11 MW. The financial closure of Lower Khare Khola Hydropower Project has been conducted for 11 MW with Bank of Kathmandu (BOK) as lead bank. We also have 10.3 MW DordiKhola Hydropower project situated in Lamjung District of which loan agreement and PPA has been completed. 4. Brief us about Khare Khola Hydropower Project. Lower Khare hydropower project  is located at Suri, Chankhu and Khare VDCs of Dolakha District. Infrastructures needed for the construction of the project has been well built. Feasibility study, paper works and license related tasks have been accomplished. Project PPA, loan agreement, Employment Insurance has already been done. More than 90% of lands area have already been bought that are required for the construction of the project. Besides, the risk minimization task in the construction of the project has almost been covered. By Baishak we shall begin the project in full fledges. We aim to complete the in 3-4 years of time. Till now we have made an investment of Rs. 13 crore in the project. 5. How is CEDB Hydro Fund  planning to manage investments required for its Lower Khare Khola hydropower project? The main investor of the project is CEDB Hydro Fund. So far we have made all the investment required for the project till now. Our subsidiary company Radhi Bidhut Company has also showed commitment to investment in the project and for the investment the company has also called for right shares. Radhi hydropower project will be issuing IPO to general public to make an investment in Lower Khare Hydropower project. The total investments will be worth Rs. 30-40 crore. Except these, CEDB  is issuing preferential share so that other general investors could also invest in the hydropower project. We have not publicized it but I would like to add that interested people can contact the CEDB office to know further information about the preference shares. We have done loan agreement with Bank of Kathmandu. Sanima Bank, Kumari Bank, MachapuchchhreBank, Kailash Bikas Bank and Janata Bank will also be providing loan for our project. 6. The company is issuing preference shares to the public. How can public be assured of getting a positive return from their investment in the preference share? As I said earlier, we have carried out each and every process carefully and systematically. We have already made an investment of Rs 13 crore in the project. Since a big chunk of investment has already been made; small investors can be assured about the success of the project. We will be completing the project on time. We have issued preference share to attract general investors in the project. We will be providing 7.5% interest rate on preference shares every year. We have even fixed the date for conversion of the preference share into ordinary share. The conversion of preference share will be done by the Ashad end of the Year 2076. We will be issuing IPO thereafter. Investors who have already invested in the project will benefit from the converted shares and the IPO shares at the same time. So we are encouraging investors to buy preference shares. After three years, the converted shares will be of high value in the secondary market. 7. What are the problems that you face while developing a project? The hydropower projects do not get proper support from the government. There is no governing body in hydropower sector. There is also lack of proper rules and regulations therefore the construction of hydropower projects get delayed. It takes a lot of time to get approval from the government to start a hydropower projects. Sometimes we have to doubt about the seriousness of government in making hydropower projects. However we are getting support from public. 8. What would you like to say to the investors? We are currently developing  Lower Khare Hydropower Project. We are assured to complete the within 3-4 years of time period. Henceforth, I would like to conclude that there is no risk in investing in the upcoming hydropower projects under this group.