A development bank is taking all the financial charges and acting as an financial consultant apart from being trustee and also look into other matters related to project finance of a hydropower project.
"Ace Development Bank will take charge of the entire financial management of the project and will play the lead role of financial advisor, fund manager and trustee for the 34 Megawatt (MW) Marshyangdi III hydropower project being developed by Keton Hydropower Ltd, a subsidiary company of BPC," Siddhanat Raj Pandey, managing director and chief executive officer of Ace Development Bank, said adding that Ace will raise approximately $78 million from the domestic and international financial markets with 'suitable financial instruments'.
Ace has designed partially convertible debenture with embodied option to raise the required capital. It believes that the instrument will be lucrative for both domestic as well as international investors to invest in.
Ace's hydro power initiative focuses on the hydro sector and is timely and intelligent investment as the country is passing through severe energy crisis. The rising oil prices and load-shedding have hit Nepal. Nepal Oil Corporation (NOC), the sole supplier of the petroleum products in the country, has been asking more money from the government and government has time and agian refused to provide cash to bail it out. The government gave the cash-stripped NOC Rs 6 billion but still, its in loss.
Nepal's dependency on fossile fuel cannot be lessened without the development of hydropower. And the rising global oil price has no other remedy than to shift the dependence from fossile fuel to hydropower.
Chilime Hydropower Company became the model hydro power project for hydropower development through mass participation and paved the way for more private palyers to enter into the business.
It is the first hydropower company to be listed and trade its shares at the Nepal Stock Exchange Ltd (Nespe).
However, the much-taled and appreciated Chilime model has not been replicated as there are only three listed hydropower companies in the secondary market.
Though, the 309-MW Tamakoshi is to follow the Chilime model, Ace has planned another model of raising the required capital. It has planned 'partially convertible debenture with embodied option' to raise capital. Ace's commitment to provide a one window entire financial management facility for the hydropower projects of any size is an example of how Nepali financial institutions can help hydropwer sector.
Ace will pool a team of qualified professionals including hydro technicians, bankers, capital market specialists and network with domestic as well as international investors including global Venture Capital firms. Ace will fulfill the huge capital requirement for the domestic hydro sector to some extent. "It will also be the first of its kind in Nepal's financial market," Pandey claimed.
The investment in hydroelectric power plant is the best inverstment. But still only three hydro power projects are listed and their shares are being traded. The group-wise distribution of the traded shares and amount show that the trading of commercial banks occupies 47 per cent of the total volume. Finance companies, development banks, hydropowers and insurance companies occupied 24 per cent, 13.47 per cent, 13.40 per cent and 2.04 per cent of the total volume, respectively during mid-March to mid-April 2008, according to the Nepse.
Once the dam is built, it will provide with dividends forever. Revenues from dams are inert as a lead weight. You sell your power to utilities in long-term contracts. These contracts might span 30 or 50 years of period. You build in a provision for inflation, check the utility's credit and then you collect your perpetuity. Revenues from hydroelectric power plants don't care about panics on Nepse or recession.
Listed hydel companies
"Ace Development Bank will take charge of the entire financial management of the project and will play the lead role of financial advisor, fund manager and trustee for the 34 Megawatt (MW) Marshyangdi III hydropower project being developed by Keton Hydropower Ltd, a subsidiary company of BPC," Siddhanat Raj Pandey, managing director and chief executive officer of Ace Development Bank, said adding that Ace will raise approximately $78 million from the domestic and international financial markets with 'suitable financial instruments'.
Ace has designed partially convertible debenture with embodied option to raise the required capital. It believes that the instrument will be lucrative for both domestic as well as international investors to invest in.
Ace's hydro power initiative focuses on the hydro sector and is timely and intelligent investment as the country is passing through severe energy crisis. The rising oil prices and load-shedding have hit Nepal. Nepal Oil Corporation (NOC), the sole supplier of the petroleum products in the country, has been asking more money from the government and government has time and agian refused to provide cash to bail it out. The government gave the cash-stripped NOC Rs 6 billion but still, its in loss.
Nepal's dependency on fossile fuel cannot be lessened without the development of hydropower. And the rising global oil price has no other remedy than to shift the dependence from fossile fuel to hydropower.
Chilime Hydropower Company became the model hydro power project for hydropower development through mass participation and paved the way for more private palyers to enter into the business.
It is the first hydropower company to be listed and trade its shares at the Nepal Stock Exchange Ltd (Nespe).
However, the much-taled and appreciated Chilime model has not been replicated as there are only three listed hydropower companies in the secondary market.
Though, the 309-MW Tamakoshi is to follow the Chilime model, Ace has planned another model of raising the required capital. It has planned 'partially convertible debenture with embodied option' to raise capital. Ace's commitment to provide a one window entire financial management facility for the hydropower projects of any size is an example of how Nepali financial institutions can help hydropwer sector.
Ace will pool a team of qualified professionals including hydro technicians, bankers, capital market specialists and network with domestic as well as international investors including global Venture Capital firms. Ace will fulfill the huge capital requirement for the domestic hydro sector to some extent. "It will also be the first of its kind in Nepal's financial market," Pandey claimed.
The investment in hydroelectric power plant is the best inverstment. But still only three hydro power projects are listed and their shares are being traded. The group-wise distribution of the traded shares and amount show that the trading of commercial banks occupies 47 per cent of the total volume. Finance companies, development banks, hydropowers and insurance companies occupied 24 per cent, 13.47 per cent, 13.40 per cent and 2.04 per cent of the total volume, respectively during mid-March to mid-April 2008, according to the Nepse.
Once the dam is built, it will provide with dividends forever. Revenues from dams are inert as a lead weight. You sell your power to utilities in long-term contracts. These contracts might span 30 or 50 years of period. You build in a provision for inflation, check the utility's credit and then you collect your perpetuity. Revenues from hydroelectric power plants don't care about panics on Nepse or recession.
Listed hydel companies
Company ------------Unit shares------------total money
National Hydro Power Co -- 7,000,000 -- Rs 700,000,000
Butwal Power Co Ltd -- 8,390,577 -- Rs 839,057,700
Chilime Hydro power Co -- 7,296,000 -- Rs 729,600,000
Total ---------------------22,686,577 --Rs 2,268,657,700
National Hydro Power Co -- 7,000,000 -- Rs 700,000,000
Butwal Power Co Ltd -- 8,390,577 -- Rs 839,057,700
Chilime Hydro power Co -- 7,296,000 -- Rs 729,600,000
Total ---------------------22,686,577 --Rs 2,268,657,700
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