Nepal Electricity Authority Retains 'ICRA NP Double A Plus' Credit Rating; Proposes Share Issuance to Public

Nepal Electricity Authority (NEA) has, this year too, received the 'Double A Plus' credit rating.

The ICRA Nepal Ltd, the credit rating agency in Nepal, has granted the 'ICRA NP Double A Plus' to the NEA, the State-owned entity.

The recipients of rating are considered to have a high degree of safety regarding the timely servicing of financial obligations. They carry very low credit risk.

According to ICRA Nepal, the rating is only an opinion on the general creditworthiness of the rated entity and is not specific to any debt instrument.

The financial status of NEA, assets, business and financial risks, managerial capacity, internal and external environmental factors affecting operational effectiveness were assessed by the ICRA Nepal before assigning an issuer rating of Double A Plus to the organisation.

Credit ratings serve as a tool for assessing the creditworthiness of both individuals and organizations and for expressing opinion. They provide opinions on an entity's ability to meet it debt obligations, presenting a clear and simple indicator about related financial risks.

NEA managing director Kulman Ghising said the NEA has bagged the 'Double A Plus' credit rating from among the public entities, presenting its high-level of capacity to bear the financial obligations.

Furthermore, the Authority has submitted a proposal to the Ministry of Finance to issue shares to the general public as part of the third financial restructuring, as authorized by the Nepal Electricity Authority Act, 2041. This proposal aims to issue primary shares worth approximately Rs. 60 Arba to the general public while maintaining the Authority's paid-up capital at around Rs. 3 Kharba, adding a 10 percent premium to the amount. The book value of the shares is proposed to be maintained at around Rs. 125, with an equivalent premium.