Aug 1, 2018-The Ministry of Energy, Water Resources and Irrigation (MoEWRI) is preparing a modality under which members of the public can buy primary shares in hydropower projects being developed by state-owned enterprises on an instalment basis.
State-owned Hydro-electricity Investment and Development Company Limited (HIDCL), which was assigned to prepare the modality for people’s participation in the development of key hydropower projects in the government’s basket, has created the scheme.
Energy Minister Barsha Man Pun had assigned HIDCL CEO Chhabi Raj Pokharel to prepare a modality to allow a maximum number of people to invest in hydropower projects being developed by state-owned companies.
As per the scheme, people can purchase shares at the initial public offering by paying 10 percent of the face value.
They have to pay another 50 percent of the face value after 80 percent of the construction is completed. The remaining 40 percent of the face value needs to be paid after the construction of the project is close to completion.
For example, one can purchase a share with a face value of Rs100 by paying Rs10 initially and has to pay Rs50 after 80 percent of the construction of the project is completed. The remaining Rs40 has to be paid when the project is about to be completed.
“If the public is allowed to make investments this way, the financial burden will be less, and a larger section of the population can invest in such projects. Also, the people will feel that their investment is secure as they will be making payments in instalments based on the progress of construction works,” said Pokharel. “Therefore, we came up with this scheme.”
Meanwhile, HIDCL has selected 19 different projects under the ownership of various government-owned companies to be developed with the investment of the general public.
The projects selected by the company are the 101 MW Tamakoshi-5, 48 MW Bheri Babai Diversion Multipurpose, 725 MW Upper Arun, 450 MW Kimathanka Arun and 307 MW Jagadulla Khola hydropower projects, among others.
As per HIDCL’s modality, 70 percent of the project development cost will be covered by loans while 30 percent will come from equity investment. “Our recommendation to the ministry is to use public investment for up to 49 percent of the equity while the remaining 51 percent of the equity will be of the companies that own the project,” said Pokharel.
According to Pokharel, HIDCL will submit the first draft of the modality to the ministry within a couple of days.
The final draft will be prepared after deliberations.
Source: The Kathmandu Post
