Kathmandu, 16 Feb – The Nepal Electricity Authority has once again secured a ‘Double A Plus – bb’ rating this year. ICRA Nepal Ltd. has assigned the authority an ‘ICRA NP Double A Plus’ rating, marking the third consecutive year the authority has achieved this rating.
This rating was awarded based on a comprehensive assessment of the authority’s financial standing, assets, business and financial risks, management capabilities, operational efficiency, and various internal and external factors that impact its performance.
A ‘Double A Plus’ rating signifies a strong capacity to meet financial and economic obligations on time, with an extremely low risk of defaulting on loan repayments. Credit ratings are essential for evaluating the creditworthiness of individuals or institutions, providing a clear and accessible understanding of the risks associated with their ability to repay debt.
Kulman Ghising, the Managing Director of the Authority, noted that maintaining the Double A Plus rating for three years reflects the institution’s robust financial health and its ability to honor debt commitments. He added that the authority has proven its capacity to meet financial and economic obligations confidently.
Ghising said, “The institution’s rating, a key criterion for issuing shares to the public, is complete. We have already determined the actual value of the institution’s assets. Once we receive government approval, we will proceed with the share issuance. The funds raised will be invested in the development of major hydropower projects.”
He also mentioned plans to secure the necessary capital for power generation projects and system improvements—aiming to enhance the reliability, quality, and security of the electricity supply—by using the institution’s earnings and funds raised through share issuance.
The Authority plans to issue primary shares to the public, with a proposed paid-up capital of around NPR 300 billion, plus a 20% premium. The price for the shares, including the premium, is expected to be around NPR 300 per share. The Authority’s annual revenue is NPR 116 billion, and its total assets surpass NPR 700 billion.
The Authority was established under full government ownership to provide a reliable, efficient, and accessible electricity supply, overseeing the generation, transmission, and distribution of electricity. Apart from domestic electricity generation, transmission, and distribution, the Authority also participates in both domestic and cross-border electricity trade.
The government continues to invest in the Authority through annual budget allocations, share investments (either cash or debt capitalization), and other necessary funding to support its electricity development programs. Fully owned by the government, the Authority holds a monopoly on electricity transmission, distribution, and trading both domestically and internationally, making it a key strategic institution for the government.
The Authority has signed long-term Power Purchase Agreements (PPAs) for nearly 11,000 megawatts of hydropower projects with both domestic and foreign investors. The rating results demonstrate that the Authority has a high financial capacity to meet its project payments, indicating no investment risk.
The Authority has made remarkable strides in reducing both technical and non-technical electricity losses, increasing customer access, lowering financial costs, boosting revenue, expanding transmission and distribution infrastructure, and improving institutional governance to generate profits.
In fiscal year 2015/16, the Authority posted a net loss of NPR 8.89 billion, but by FY 2073/74, it achieved a net profit of NPR 1.5 billion, marking the start of its profit-making history. By FY 2080/81, the Authority’s profit had grown to NPR 14.46 billion, and the accumulated loss of NPR 34.61 billion in FY 2015/16 turned into an accumulated profit of NPR 47.41 billion. The Authority reduced system electricity losses to 12.73% in the last fiscal year, compared to 25.78% in FY 2072/73.
