The Nepal Electricity Authority (NEA) has once again attained a ‘Double A Plus (AA+)’ credit rating. According to a press release from NEA, ICRA Nepal Ltd., the country’s credit rating agency, has assigned an ‘ICRA NP Double A Plus’ rating to the NEA. With this achievement, the Authority has secured a Double A Plus rating for the third consecutive year.
This rating reflects a thorough examination of the Authority’s financial stability, assets, commercial and fiscal risks, management efficiency, and the internal and external environmental factors influencing its operational effectiveness. An entity granted a Double A Plus rating demonstrates a robust capacity to meet its financial responsibilities punctually. There is a minimal risk associated with credit repayments in transactions involving an organization holding a Double A Plus rating.
Kul Man Ghising, the Managing Director of NEA, remarked that the Authority has consistently maintained a Double A+ rating over the past three years, indicative of its sound financial standing and ability to fulfill its debt obligations. Ghising asserted that the Authority is confident in its capability to honor its economic and financial commitments.
He noted, “The assessment of the organization, a significant requirement for public share issuance, has been finalized. We have appraised the true assets of the organization. The share issuance process can proceed upon receiving government approval. We intend to allocate the funds obtained from this issuance towards the development of major hydropower projects.”
NEA is proposing to issue shares priced at Rs. 300.
The Authority has put forth a proposal to issue primary shares to the public at a premium that could reach 20 percent of the paid-up capital, approximately amounting to Rs. 300 billion. The shares are proposed to be offered at around Rs. 300 per share, including the premium, according to the NEA. The Authority boasts an annual revenue of Rs. 116 billion and total assets exceeding Rs. 700 billion.
Established under full government ownership, the Authority aims to enhance the efficiency, reliability, and accessibility of electricity generation, transmission, and distribution while effectively managing electricity supply. Besides handling electricity generation, transmission, and distribution domestically, the Authority also participates in both domestic and international electricity trade. The government invests in the Authority each year through budget provisions, equity investments (in cash or through capitalization), and other necessary funds and operations to realize its electricity development objectives.
The NEA has entered into long-term power purchase agreements (PPAs) for nearly 11,000 megawatts with hydropower projects undertaken by both domestic and international investors. The rating results signify that the NEA possesses a high financial capacity to support such initiatives, thus mitigating investment risks. The Authority has made significant strides in minimizing technical and non-technical electricity losses, expanding customer access, curtailing financial expenditures, boosting revenue, and enhancing transmission and distribution networks and substations through improved institutional governance.
