Speaking at the company's 23rd Annual General Assembly on Sunday, Uttar Kumar Shrestha, CEO of BPC, said the new projects will make the company's income stable after 50 percent of the shares in Khimti Hydropower Project are transferred to the government in 2020.
BPC holds 16 percent stake in the company which is developed by Himal Power Limited. Major chunk of BPC's revenue come from dividend from the shares that it holds in Khimti Hydropower Project. The company received Rs 429.4 million as dividend payment from Himal Power Limited in 2014/15.
The amount is 89.5 percent of BPC's annual net profit of Rs 479.8 million generated in the fiscal year.
“Our shareholding in Khimti Hydropower Project will be reduced after 50 percent of shares in the project are transferred to the government after 2020.
This will also hit our profit,” Shrestha said.
Concession period of Khimti Hydropower Project is 50 years, starting 2000.
“We have started works to develop Kabeli 'A' Hydroelectric Project (37.6 MW) and Nyadi Hydropower (30 MW). They will start generation by 2020 and will make up for deficiency in our earnings,” he added.
However, BPC shareholders are worried as returns on investment in hydropower projects do not bring sizable return during debt service period that generally spans from eight to 12 years.
Construction work of Kabeli 'A' will begin from the first quarter of 2016. It is expected to start generation from September, 2019.
BPC is investing in Kabeli 'A' through its subsidiary company Kabeli Energy Limited. IFC, a private sector lending arm of World Bank, has already signed agreement to lend US$ 38.6 million to the project. Similarly, the World Bank is funding an additional $40 million in the project through Hydropower
Investment Development Company Limited (HIDCL), according to BPC's annual report released on Sunday.
“We finalized draft of loan agreement document for Kabeli 'A' and forwarded it to the Ministry of Finance for final approval last week,” Deepak Rauniyar, CEO of HIDCL, said. “We will soon sign the loan agreement.”
Shrestha said BPC has already selected civil and electro mechanical contractors for the Kabeli A project. “We will mobilize contractor and release funds for them immediately after the project achieves financial closure,” he added.
Similarly, BPC officials say the contractor selection process for Nyadi Hydropower Project has already started. The plan is to start the project by mid-2016, the annual report states.
Meanwhile, the annual general meeting approved the company's proposal to provide 20 percent cash dividend to BPC shareholders.
BPC Chairman Padma Jyoti told shareholders that the company has not issued bonus and right shares as the company is in need of huge amount of money to invest in the two projects. “When we need fund, we will collect it from shareholders by issuing right shares,” he said, adding, “BPC is a company of long-term investments; our shareholders need to show patience.”
BPC earned Rs 523 million from the sale of electricity in bulk and retail as well as other services in 2014/15, according to annual report. Jhimruk Khola Hydropower Project (12.5) and Andhikhola Hydropower Project (9.4MW) are the company's major projects in operation.
Meanwhile, detailed project report for Lower Manang Marshyangdi (100 MW) is in the final stage of preparation. BPC has already applied for generation license of the project located in Manang district.
Government of Nepal, United Mission to Nepal, NIDC Development Bank, Nepal Electricity Authority jointly own 13 percent share in the company, while Shangri-La Energy Limited and IKN Nepal AS hold 75 percent shares in the company. Remaining 12 percent of shares are held by general public.
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