KATHMANDU, Sept 29: As part of the plan to unbundle Nepal Electricity Authority (NEA), Minister for Energy Janardan Sharma has taken initiative to set up a company focused solely on power generation.
Sources say Nepal Telecom (NT) and Employees Provident Fund (EPF) are keen to make equity investments in the proposed company - Bidyut Utpadan Co Ltd.
The energy ministry recently sought opinion of the Ministry of Finance, and Ministry of Law, Justice and Parliamentary Affairs on rules and article of association of the proposed company.
Energy ministry officials said that the main focus of the energy minister at present is on Bidyut Utpadan Co Ltd.
The energy ministry had proposed EPF to own 10 percent equity shares in the proposed company. However, EPF had showed interest to hold 25 percent equity shares. The investment committee of EPF, led by its CEO Krishna Prasad Acharya, has decided to send an expression of interest to own 25 percent stakes in the company, sources say.
This is the first time that EPF has showed interest to invest in companies other than banks and financial institutions (BFIs). This became possible because of the recent amendment to the Employee Provident Fund Act by the parliament.
“So far, we have only been extending loans to infrastructure projects, particularly hydropower projects. The recent change in the law has enabled us to be promoter shareholders of infrastructure companies,” Acahrya told Republica. “We have decided to own 25 percent shares in Bidyut Utpadan Co Ltd.”
Earlier, EPF had told Minster Sharma that it has Rs 35 billion to invest in infrastructure projects and that it can invest Rs 20 billion annually.
Likewise, the energy ministry has allotted 4 percent stakes in the proposed company for the NT. General public will have 23 percent shares in the company, while locals in the affected area will be given 10 percent of shares (for subsidiary projects only). Remaining 2 percent of shares have been set aside for under-privileged people.
Earlier, the ministry had proposed giving 15 and 10 percent of shares to general public and locals of affected area, respectively.
Gokarna Raj Panth, deputy spokesperson of the energy ministry, said that the changes in share structure have allowed the company to offer more shares to general public.
“Likewise, entities having huge resources like EPF and NT can become promoters,” he added.
The issued capital of the company is Rs 20 billion, while the paid-up capital is Rs 2 billion, according to the article of association.
MoE will soon table the proposal for establishing the company in the cabinet for final endorsement before registering the company at the Office of Company Registrar.
The formation of the company will be a step forward in the implementation of Hydropower Development Policy of 2001 and the plan to unbundle NEA which has been handling three businesses -- generation, transmission and distribution services.
Though MoE has set up National Transmission Grid Company (NTGC), it has not materialized due to protest by trade unions in the power utility.