NEA Is Received Double A In Ikra Rating

Ikra Nepal stated that the capital investment made for the enhancement and expansion of the transmission and distribution system could create a temporary strain on the organization's cash flow. NEA estimated a net profit of Rs. 12.33 billon million in the fiscal year 2079/80.

Oct. 17, 2023, 7:56 a.m.

Plus' credit rating this year, as Ikra Nepal Ltd. has awarded them with an 'Ikra NP Double A Plus' rating. This is the same rating that the authority received last year.

Entities that receive a double A plus rating possess a high capacity to fulfill their financial and monetary obligations in a timely manner. Financial transactions with institutions holding a double A Plus rating entail minimal risk of loan repayment.

Ikra Nepal conducted a detailed analysis of the authority's financial situation, property, business, and financial risks, as well as its managerial capacity, internal and external environmental factors that may impact operational effectiveness. The credit rating of the authority was established based on the same analysis.

Credit rating serves to assess an individual's or an organization's credit quality and express an opinion. This passage presents an opinion as an indicator of the risk associated with the organization's ability to meet its debt obligations.

The government wholly owns the authority responsible for ensuring efficient, reliable and accessible electricity generation, transmission and distribution along with domestic and cross-border electricity trading.

The government is providing support to the authority by annually allocating budget, investing in shares (cash or interest/debt capitalization), and providing other essential funds to execute its programs for electricity development.

Kulman Ghising, Managing Director of Nepal Electricity Authority, stated that the organization has achieved a double A plus credit rating, making it one of the safest government bodies to manage financial obligations.

Kulman Ghising.jpg

The proposal to issue shares to the general public in accordance with the Nepal Electricity Authority Act, 2041 has already been submitted to the Ministry of Finance after the third round of financial restructuring.

It has been proposed to issue initial shares valued at approximately £300 million to the public while retaining the paid-up capital of the authority at about Rs. 300 billion. A premium of 10% will be added to the proposed amount.

The authority's share book value will remain around £1.25 and shares will be issued by adding the same premium amount.

Managing Director Ghising stated that following the approval of the institution's credit rating, the process of issuing shares can proceed with the consent of the government.

"Based on the credit rating, the financial stability of the institution has been determined to be strong with the ability to pay off debts. "Based on the credit rating, the financial stability of the institution has been determined to be strong with the ability to pay off debts. The replacement of imported electricity during winter to meet internal demand is progressing rapidly, and there has been an annual increase in electricity exports, internal electricity consumption, and control of system leakage. "Based on the credit rating, the financial stability of the institution has been determined to be strong with the ability to pay off debts. As a result of these successes, Ghising anticipates an increase in the organisation's profits."

To enhance and broaden the electricity supply system, it is imperative to invest heavily in the construction of production projects. This requires substantial capital, and we have devised a plan to cover this investment gap by utilizing the organization's profits and funds generated from share issuance. Our ultimate goal is to ensure higher reliability, safety and quality in the electricity supply.

The organisation is engaging in long-term arrangements to purchase power from hydropower schemes constructed by both domestic and foreign investors.

A credit rating survey has confirmed that there is no investment danger as the organisation possesses a significant amount of financial capability to finance such schemes.

Ikra Nepal, a government-owned authority, holds a monopoly on the transmission, distribution, purchase, and sale of electricity both within the country and internationally. As a strategic government organization, it has a power generation capacity of approximately 1,100 megawatts, which includes its subsidiaries. The government invests in its loans and shares annually through the budget.

Ikra Nepal stated that the capital investment made for the enhancement and expansion of the transmission and distribution system could create a temporary strain on the organization's cash flow. NEA estimated a net profit of Rs. 12.33 billon million in the fiscal year 2079/80. The system's electricity loss is 13.46 percent.

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