Deck cleared for HIDC to invest in hydro projects

KATHMANDU, JUN 25 -

The deck has been cleared for Hydroelectricity Investment and Development Company (HIDC) to invest in hydropower projects.

A meeting of the board of directors of HIDC recently approved the Treasury and Investment Policy , Financial Source Management Policy, Loan Investment Policy and Good Governance Policy.

HIDC has not been able to invest in hydropower projects in the absence of these policies. It has already been approached by projects seeking financing.

As per the Treasury and Investment Policy, HIDC can invest in any hydropower project provided its promoters have invested at least 20 percent of its paid-up capital or 25 percent of the total capital. “The company can only invest up to 25 percent of its total capital in a project,” states the policy.

The policy also says that HIDC will take a power purchase agreement (PPA) between the promoter and the Nepal Electricity Authority (NEA) as a prerequisite to making an investment. “The company will not invest less than Rs 250 million in a project, and the project should have a capacity of more than 25 MW,” states the policy.

“Under these policies, the company will be able to invest in hydropower projects as per its laws once endorsed by the central bank,” said Hariram Koirala, secretary of the Energy Ministry. HIDC has sent the recently approved policies to Nepal Rastra Bank (NRB) for final endorsement.

The Financial Source Management Policy allows HIDC to take loans from banks and financial institutions (BFIs) to manage funds, disburse the money received from the government and local and international bodies as loans and purchase and sell shares, debentures and bonds. “The company should issue a Certificate of Deposit while collecting funds of Rs 1 million in case of a person and Rs 10 million in case of an institution,” states the FSMP.

The company, as per its memorandum of article and article of association, will invest in projects through the existing BFIs under refinancing measures.

“This is the total package necessary to invest in hydro projects,” said a board member. “Lack of criteria to invest in loans and shares of the company which now has been mentioned in the package had hindered it from investing in hydro projects.”

The government established HIDC to fund large hydel projects and accelerate hydropower development in the country as lack of financial resources has been one of the major stumbling blocks.

The company has Rs 6 billion in its account collected as share investment from its share holding authorities. HIDC has deposited most of the funds collected from its promoters with the aim of earning interest while the company prepares to go into business.

“We have not been able to invest the funds so far in hydropower projects,” he said.

A cabinet meeting on July 6, 2011 had decided to allocate Rs 5 billion for the company with Rs 2 billion each from the MoE and the Finance Ministry and Rs 1 billion from the Law Ministry. The Employees Provident Fund (EPF), Citizens Investment Trust (CIT) and Rastriya Beema Sansthan had pledged share investments of Rs 1 billion each to take the promoters’ stake in the company to Rs 8 billion, according to officials. The company, whose paid-up capital is Rs 10 billion, will issue ordinary shares worth Rs 2 billion.

Source: http://www.ekantipur.com/2012/06/25/business/deck-cleared-for-hidc-to-invest-in-hydro-projects/356129/