Deepak Rauniar, CEO 2

Transcription

1 WARM WELCOME

2 Jalavidhyut Lagani Tatha Bikash Company Limited ( Deepak Rauniar, CEO 2

3 Background Nepal - Baseline The Story So Far Mostly of an Unrealized Potential The Present Situation Significant Demand-Supply Gap (thus Market for Power Projects) A number of Projects identified and Being Pursued by different Proponents Cross Border Infrastructure slowly becoming a reality : import-export of Power Mixed Signals The Future A couple of Projects including Bigger Projects will enter construction and thus require significant Finance - Investment Opportunities

4 Financing Hydro Projects Hydro Projects - Financing Trend Past: Utility Based Financing Financing based on the Financial Strength of the Utility or Creditworthiness of the Underlying Government Usually under concessional arrangements Trend: Project Financing Projects stand on their individual merits Projects mostly driven by/require private finance Power Projects Financing in Nepal Imbalance between Projects and Finance A Number of Projects of different size and target market identified, some ready to go Constraint of Finance Capacity Constraint of State Capacity Constraint of Financial Institutions Limited Notion of Fis, International Finance, Markets, Instruments, Access to Finance

5 Financing Hydro Projects Hydro Projects - Financing Issues High Capital Costs (Nepali Rs. 1.5 Million/MW) High Front-End Costs Long Construction Period Mismatch of Loan Tenor and Asset Life Equity Issues Hurdles Infrastructure What is a Bankable Project? Hydro Projects Sources of Financing Budgetary Support Concessional Arrangements (mostly arranged by GoN) Multilateral Institutions Domestic Banks and Financial Institutions International Banks and Financial Institutions Public Sector Enterprises HIDCL Institutional and Individual Investors (Domestic and International) Markets and Instruments?

6 Markets Some Recent Activities Markets Some Recent Activities S.No Bank IPO Application No of Shares Amount (NRs) Amount (NRs) Remarks 1 Mega Bank 6,990, ,000,000 14,200,000, Times Oversubscription 2 Civil Bank 8,000, ,000,000 4,000,000,000 5 Times Oversubscription 3 Janta Bank 6,000, ,000,000 1,800,000,000 3 Times Oversubscription 4 Commerz and Trust Bank 6,000, ,000,000 6,600,000, Times Oversubscription Why is there Over Whelming Response in Equity of Financial Institutions?

7 Hydroelectricity Investment and Development Company Limited (HIDCL) A Public Limited Company (estd. in July, 2011) A Recognized Financial Institution A Unique Company With Focus Broader Mandate: Generate and Invest Resources for generation, transmission and distribution of hydroelectricity projects Business Objectives Invest in Projects Either as Debt or Equity Self or through banks and financial institutions Borrow loan and receive grants from foreign govt. and international financial institutions Issue financial instruments such as bonds, debentures, and certificate of deposit for long term capital mobilization

8 About HIDCL contd.. Salient Features Invest exclusively in hydropower (Focus) One of the Biggest Capitalized Public Institution Authorized: Rs. 50 Bln Issued: Rs. 10 Bln Promoter : Public (80%:20%) IPO soon Focus-Hydroelectricity Invest directly only in middle and mega hydropower projects with installed capacity of not less than 25 MW Lend at least Rs. 250 million in a project Invest only through bank consortiums in hydropower projects of installed capacity between15-25 MW Lend at most Rs. 200 million in a project Can provide on-lending and refinance facilities to bank against their hydro project investments (at banks risk) Designed to functions as an organized professional Institution Three Pillar Strategy Capacity Building Fund Management Investments Promoters 1. Ministry of Finance 2. Ministry of Energy 3. Ministry of Law, Justice, Constituent Assembly & Parliamentary Affairs 4. Office of Comptroller General 5. Employees Provident Fund 6. Citizen Investment Trust 7. National Insurance Company

9 About HIDCL contd.. Portfolio Committed Projects Generation: Financial Closure of close to One Billion Rs. In 42 MW Mristi Khola Project Transmission: 14 % equity in PTCN Company Under Review Four Generation Projects of 27 MW, 25 MW, 23.5 MW and 20 MW Projects World Bank PDF for 37.6 MW Project Vision and Long Term Value Proposition Become the top hydro power investment company in Nepal of international standards Develop Capabilities for Financing of Middle-Mega Projects: i) Financial and ii)technical One stop shop for Foreign Investors, Matchmaking for domestic project investment needs

10 Expectations, Aspirations and more Expectations from HIDCL Assume LEADERSHIP in Financing of Middle to Mega Projects Offer LOWER interest rates by building low cost funds Offer INNOVATION in Finance Expectations ~ Responsibility

11 Domestic Resource Base A Review Resource Base Institution (around) Government of Nepal (Budget for FY 69/70) 517 Billion Nepal Rastra Bank (Reserves + Surplus) 37 Billion Commercial Banks 1,067 Billion Development Banks (Total Assets) 170 Billion Finance Company (Total Assets) 112 Billion Insurance Companies (Total Assets) 13 Billion Insurance Companies (Reserves) 8 Billion Employees Provident Fund 140 Billion Nagarik Lagani Kosh 20 Billion Nepal Telecom (Reserves and Surplus) 35 Billion Mutual and Equity Funds 1-2 Billion Nepal Army Welfare Trust 22 Billion Nepal Police Welfare Fund < 1 Billion Armed Police Welfare Fund < 1 Billion Social Security Fund 4 Billion National Level Beneficiary Fund 4 Billion Hydroelectricity Investment and Development Company 8 Billion Remittances (Annual) 350 Billion

12 Markets Returning Back Markets Some Recent Activities S.No Bank/FI IPO Application Amount No of Shares Amount Remarks 1 Mega Bank 6,990, ,000,000 14,200,000, Times Oversubscription 2 Civil Bank 8,000, ,000,000 4,000,000,000 5 Times Oversubscription 3 Janta Bank 6,000, ,000,000 1,800,000,000 3 Times Oversubscription 4 Commerz and Trust Bank 6,000, ,000,000 6,600,000, Times Oversubscription Why is there Over Whelming Response in Equity of Financial Institutions? Capital Gain Little Barrier to Entry and Exit

13 Domestic Resources Some Facts Fact 1: Significant Domestic Resource Base Dispersed Can be available for Projects (if Return >= Present/Perceived Return) Institutions are looking for long term placement opportunities Fact 2: Significant Interest of Public in Equities People looking for attractive long term investments in equities with features of i) value appreciation and ii) little entry and exit barrier Challenge for Hydro Projects How to capitalize on the above facts

14 Thought Processes at HIDCL Growth of our own Fund Borrowings Instruments (Project Basis) Low Cost Debt Fund Lower Interest Rates to Projects Refinancing/On lending (a bit longer horizon) Fixed Interest Rates FX Fund To offer Forward Contracts Exchange Listed Equity Funds General Public Participation in Projects Diaspora Participation in Projects Raising of International Finance FDIs Directly in Projects: Match Making of International Equity in Domestic Projects HIDCL Basket Technical Capabilities To Projects To Domestic Banks and FIs in Hydro Finance

15 Thank You

16 PROJECTS (a partial list)

17 Projects Nepal needs power projects Domestic Needs, Regional Needs Power Projects: Several Domain Domain 1: Nepal Investment Board S.No Project Capacity in MW Developer 1 Tamakoshi SN Power Company 2 Arun III 900 Sutlej 3 Upper Karnali 900 GMR 4 Upper Marsyangdi II 600 GMR 5 West Seti 750 Three Gorges Total: 3800

18 Projects Domain 2: Government of Nepal S.No Project Capacity in MW Estimated Cost in MUS$ 1 Nalsyau Gad Budhi Gandaki Total: Domain 3: Department of Electricity Development (DoED) S.No Project Capacity in MW Estimated Cost in MUS$ 1 Sun Koshi Sun Koshi Budhi Ganga 20 Total: 1620

19 Projects Domain 4: NEA S.No Project Capacity in MW Estimated Cost in MUS$ 1 Kali Gandaki (Storage) Tamor (Storage) Andhi Khola (Storage) Dudhkoshi Uttar Ganga Upper Arun Tamakoshi V 87 8 Trishuli 3B 40 9 Upper Modi 42

20 Projects Domain 5: Storage Projects Identified by JICA/NEA Study Team S.No Project Capacity in MW Estimated Cost in MUS$ 1 Nalsyau Gad Dudh Koshi Andhi Khola Chera Lower Jhimruk Madi Kokhajor Naumure Sun Koshi Lower Badigad Total:

21 Projects Domain 5: Independent Power Producer Domain 6: Projects Super Six S.No Project Capacity in MW 1 Khare Khola 24 2 Maya Khola 15 3 Solu Khola 23 4 Lower Solu 82 5 Mewa Khola 50 6 Singati 16 Domain 7: WB PDF Total: 210 Estimated Cost in BNRs. S.No Project Capacity in Estimated Cost in MW MUS$ 1 Kabeli 37 93

22 Discussions