CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB’ to the long-term bank facilities worth Rs.6.16 Arba and ‘CARE-NP A4’ to the short-term bank facilities worth Rs.15 Crore of Peoples Hydropower Company Limited (PHCL).
The ratings assigned to the bank facilities of PHCL is constrained by project implementation and stabilization risk including the power evacuation risk and PHCL’s exposure to regulatory risk. The rating is also constrained by PHCL’s exposure to volatile interest rates, geological risk and hydrology risk associated with run of the river power generation. The rating, however, derives strength from board members and management having experience in hydro power sector and moderate counter party risk.
The ratings also factors in achievement of financial closure for full project cost, presence of power purchase agreement (PPA) with sufficient period coverage, shortage of power in the country and government support for the power sector. The ability of PHCL to timely complete the project without any time or cost overrun and timely completion of transmission infrastructure are the key rating sensitivities.
Peoples Hydropower Company Limited (PHCL) is a Public Limited company, incorporated as on October 9, 2007 as a Peoples Hydropower Company Private Limited and changed to public limited on February 27, 2019. It is promoted by individual promoters from different background and institutional investors for setting up of a 54 MW run-of-river, Super Dordi Hydropower Project Kha (SDHPK) in Lamjung district of Nepal. The project is constructed under BOOT (Build, own, Operate and Transfer) mechanism. As per the Generation License, the project shall be handed, on whatever conditions the project is, to the Government of Nepal after expiry of Generation License, which is 35 years.
Source: Care Ratings Nepal