NEA plans to collect funds from Initial Public Offering (IPO) and invest the fund in a number of hydropower and transmission line projects.
The IPO proposal for the state-owned power utility has already been sent to the Cabinet for approval, and it is expected to raise approximately Rs 70 billion.
The NEA has a massive investment need as a result of its involvement in several significant hydropower transmission and generation projects, part of which it hopes to satisfy by crowdsourcing funds.
“With a combined capacity of about 3000 MW, we need to invest a huge amount of money as equity for the development of hydropower projects, including Dudhkoshi, Upper Arun, Arun-4, Budhi Gandaki, and Chainpur Seti, among others,” NEA Managing Director Kul Man Ghising stated.
Ghising also stated that while a large portion of the proceeds from the IPO will go toward power generation, the funds would also be used to upgrade the distribution network.
The NEA intends to market its shares at a premium after they are issued to the public.
The NEA’s up-to-date net worth per share is Rs115. The NEA will be allowed to market its share at Rs230 per share in accordance with the proposal.
It implies that the NEA could raise up to Rs69 billion by offering to sell the public 10% of its shares.
The NEA intends to raise the maximum permitted capital to Rs300 billion through the IPO.
The country’s government is developing a plan to produce more than 28,000 MW of electricity by 2035. The government estimates that $40 billion will be needed just for generation, while up to $46.5 billion (Rs6,209 billion) might be needed to develop transmission and distribution structures and generate the targeted amount of power.
Ghising clarified, however, that once the counterpart fund commits to investing as equity, the NEA will assist in obtaining funds from outside investors to advance the project. “In order to develop the planned project, the NEA requires to have its own finances to invest as equity,” he declared.
