NEA receives ‘Double A Plus’ credit rating for the third year in a row

By A Staff Reporter,Kathmandu, Feb. 17: Nepal Electricity Authority (NEA) has received ‘Double A Plus-AA+)’ credit rating this year as well. 

ICRA Nepal Ltd., the credit rating agency in Nepal, has given a credit rating of ‘ICRA NP Double A Plus’ level to the NEA, according to a press statement of NEA.

With this, the Authority has received Double A Plus rating for the third time in a row.

The rating was based on the analysis of the Authority’s financial condition, assets, business and financial risks, managerial capacity, internal and external environmental factors affecting operational effectiveness.

An organisation that receives a Double A Plus rating has a high ability to meet its financial and economic obligations on time. 

There is very low credit payment risk in financial transactions with an organisation that receives a Double A Plus rating. 

Managing Director of NEA Kul Man Ghising said that the Authority has been able to consistently achieve a double A+ rating for the past three years, which shows that the organisation is in good financial health and has the ability to repay its debts. 

Ghising said that the Authority is able to meet its financial and economic obligations with confidence.

He said, "The rating of the organisation, which is an important criterion for issuing shares to the public, has been completed. We have evaluated the actual assets of the organisation. The process of issuing shares can be carried out after receiving approval from the government. We have planned to invest the amount collected from the share issuance in the construction of large hydropower projects."

NEA proposes to issue share at Rs. 300 

The Authority has proposed to issue primary shares to the general public with a premium of up to 20 per cent of the paid-up capital of about Rs. 300 billion. The issue of shares has been proposed at a price of about Rs. 300 per share, including the premium, said the NEA. 

The Authority has an annual income of Rs. 116 billion and assets of more than Rs. 700 billion.

The Authority was established under the full ownership of the government to make electricity generation, transmission and distribution efficient, reliable and accessible and to properly manage electricity supply.

 In addition to electricity generation, transmission and distribution within the country, the Authority is also engaged in domestic and cross-border electricity trade.

The government has been investing in the Authority annually through budget allocation, investment in shares (cash or interest/capitalisation) and other necessary funds/operations to implement its electricity development programmes.

The NEA has signed long-term power purchase agreements (PPAs) of nearly 11,000 megawatts with hydropower projects being built by domestic and foreign investors. 

The rating results show that the NEA has a high level of financial capacity to pay for such projects, and therefore there is no investment risk.

The Authority has achieved great success in reducing technical and non-technical electricity leakage, increasing access to maximum customers, reducing financial expenses, increasing revenue and expanding transmission and distribution lines and substations by improving institutional governance.