The company from Singapore has sold 50 million shares at 120 rupees and returned

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Amidst the uncertainty of the hydroelectric project, the company from Singapore has returned by selling shares worth millions of rupees at a discount of crore rupees per unit.

A company from Singapore has recently returned after selling shares worth a whopping 50 million rupees at a price of 120 rupees  in Nepal. Asia Himalayan Hydro PTE Limited, based in Singapore, has sold its 4,979,754 shares in Nepal’s Gurans Energy Limited at a price of rupees per unit. The designated value of these shares is 100 rupees each.

The company that buys shares of InfraCo Asia at a total of 120 rupees is Butwal Power Company Limited. In this company, shares of businessmen like Pradeep Kumar Shrestha from Panchakanya Group, Padma Jyoti from Jyoti Group, and also the Government of Nepal have invested 7.42 percent.

The Ministry of Industry had granted permission to sell this share in the last Chaitra (March-April). Uttar Kumar Shrestha, the Chief Executive Officer (CEO) of Butwal Power Company, confirmed that the process of share transfer had been completed from the Company Registrar’s Office. CEO Shrestha stated, “The process had been ongoing for the last three years. The share transfer process from InfraCo Asia to Butwal Power has now been accomplished.”

Even though efforts were made to expedite the process of buying and selling shares through the Nepal Stock Exchange (NEPSE), it had become contentious. NEPSE had halted this share transaction, citing concerns about its credibility. During an interview with Himal Khabar, an NEPSE official revealed that the process was halted on suspicion after a sizeable 50 million rupees’ worth of shares were attempted to be sold at a rate of 120 rupees without mentioning the individual’s name. The official stated, “When someone leaves 50 million worth of shares at 120 rupees and questions arise about why they would do that, it raises suspicions.”

Information Officer of NEPSE, Murahari Parajuli, has stated that he is unaware whether he conducted business or not, even though he had knowledge of Gurans Energy Limited’s shares being traded on the OTC market.

The CEO of Butwal Power Company has stated that the transfer of shares has been done through the company’s registrar. He mentioned, “Even though there might not have been trading in the OTC market, business has been conducted directly through the company.”

The Operational Regulation, 2008 of the OTC Market has mentioned that the trading of debentures issued by non-listed public limited companies and public institutions can be done through the OTC market if not listed in the secondary market. The NEPSE official stated that according to the regulations, OTC can only facilitate transactions through the company and not directly if it is not appropriate.

The Board of Directors of Gurans Energy Limited approved the decision regarding share purchase on 14 October 2022. Infraco Asia also decided to sell shares by the board of directors on 18 October 2022. A share transfer agreement was signed between Infraco Asia and Butwal Power Company on 8 November 2022.

Gurans Energy Limited is one of the promoters of the under construction Kabeli ‘A’ hydropower project. Gurans Energy had a 60 percent stake owned by Infraco Asia and a 40 percent stake owned by Butwal Power Company. After the transfer of Infra Asia’s shares to the name of Butwal Power, Gurans Energy is now 100% owned by Butwal Power Company.

Why did the Singaporean company walk by selling millions of rupees worth of shares at the penny price?

Shrestha, CEO of Butwal Power Company, said that after the Kabeli ‘A’ hydropower project fell into uncertainty, Infra Asia withdrew its hands. He said, “There was a situation where we wanted to proceed with the project, but they (Infraco Asia) wanted to close it. They left when the future of the project became uncertain.”

InfraCo Asia is an investment entity under the Private Infrastructure Development Group. The private infrastructure development group has investments from the UK, Netherlands, Switzerland and Australian governments. Established in 2010, Infraco Asia is investing in Indonesia, Cambodia, Vietnam, Pakistan, India and other countries. Infraco Asia started its partnership with Gurans Energy since 2012.

According to the financial report of Butwal Power Company for the financial year 2021/22, the book value of Kabeli Energy Limited, which is an investment of Gurans Energy, is 73 rupees 93 paisa. That is, even if the liability of the company is reduced, the price of each share will fall. Based on this, the value of Infra Asia’s shares is Rs 368.1 million. However, the company has sold its shares to Butwal Power Company for 120 rupees.

The foundation stone for the 37.6-megawatt Kabeli ‘A’ hydroelectric project, which was set to be constructed in the Kabeli River at the border of Panchthar and Taplejung, was laid in the month of march 2017. This project, with an estimated cost of $102.6 million (equivalent to around NPR 13.44 billion at current rates), received approval for an investment and development loan of $40 million (approximately NPR 5.24 billion) from the World Bank through the Electricity Investment and Development Company.

In this context, a loan of $9.792 million (approximately NPR 1.28 billion) had already been taken. However, the World Bank declined to provide additional funding for this project, causing a setback in the progress of the project. Due to this, the construction of the project is currently at a standstill. “The reason the project’s future is uncertain lies in the changing infrastructure focus towards Asia,” stated the CEO. He further mentioned that the company had already fulfilled its obligations related to the loan before this setback.

A 24 km access road has been constructed for the project and the land purchase and management process for the project has also been completed. Similarly, construction of one kilometer of access tunnel and 4.5 kilometer headrace tunnel has been completed. Similarly, the company has mentioned on its website that the preliminary work at the dam site has also been completed.

The proposal of this project was advanced according to the condition that the World Bank will give a loan of US$ 40 million to the government of Nepal at a concessional rate and that the loan amount will be provided by the government of Nepal to the promoter of the Kabeli ‘A’ project. According to which, the government of Nepal held a competition to select the company that will get this concessional rate loan and entrusted Butwal Power Company to develop this project in the year 2010. The government selected the promoter of the Kabeli A project through international competition based on electricity tariffs. A subsidiary of Butwal Power, which offered cheap electricity, got the project. Kabeli Energy Limited Company was formed to carry out this project, in which Gurans Energy Limited also participated.

This project has been stalled since 2020 with the withdrawal of the World Bank. Apart from that, Shrestha, CEO of Butwal Power Company, said that if the project with Tamor reservoir of 762 megawatt capacity is built, Kabeli ‘A’ will be flooded, and there is confusion in the construction. As the project is uncertain, Butwal Power Company has made investment provisioning (loss arrangement) in Kabeli ‘A’. Shrestha said that now efforts are being made to move forward in a new way by managing the finances for the construction of the project.

A source related to the Butwal Power Company said that discussions have progressed regarding the partnership of Arun Kabeli Hydropower Company promoted by hydropower investor Guruprasad Neupane for the construction of this project. However, it is not clear at what price the shares will be bought and sold. According to the agreement on the transfer of share ownership given by the Department of Industry on 24th March 2023, it is mentioned that capital gains tax should be paid based on that if the share is sold at a price higher than 120 rupees.

Source: Himalkhabar