The board of directors of the Nepal Electricity Authority has decided to issue energy bonds worth 20 billion rupees. The meeting held yesterday decided to issue the bonds only for capital expenditure as per the permission received from the Council of Ministers.

The Council of Ministers had given permission to the Nepal Electricity Authority to issue energy bonds on 9 October and had set a clear condition that the amount raised should be used for capital expenditure. As part of the implementation of the same decision, the board of directors of the authority has decided to proceed with the formal process of issuing the bonds.

According to NEA sources, out of the 20 billion rupees raised through the energy bond, 8 billion rupees will be invested in the Upper Arun Hydropower Project (1063 MW). Similarly, 5 billion rupees are planned to be spent on the Chainpur Seti Hydropower Project (210 MW), 5 billion rupees on the Tamakoshi Fifth Hydropower Project (94.8 MW), and 2 billion rupees on the Upper Modi ‘A’ (42 MW) Hydropower Project under construction. Since these projects fall under the NEA’s strategic and large-scale projects, it is said that the energy bond funds will be focused on expanding generation capacity.

The World Bank has not been able to move forward in Upper Arun due to more than 15 years of delay. Energy Minister Kulman Ghising had been saying that this project would be built with domestic investment. Similarly, the insufficient amount for Tamakoshi V, which is being built by a subsidiary of the NEA, will also be raised from the energy bond.

The annual interest rate of the energy bond will be 5.5 percent. According to the provision that permission must be obtained from the Securities and Exchange Board of Nepal for the bond issuance, a fee of 0.12 percent of the total amount to be issued will have to be paid. The Authority is preparing to proceed with the issuance process by submitting an application to the Securities and Exchange Board of Nepal soon.

The issue of energy bond issuance had been in the news before too. Although the then Managing Director of the NEA, Kulman Ghising, tried to issue energy bonds, the then Energy Minister Deepak Khadka stopped the process. After that, the issue of bond issuance remained pending for a long time. Now, with the clear permission of the Council of Ministers, the board of directors has decided again, the way for energy bond issuance has been opened.

According to energy sector experts, investing in large hydropower projects by mobilizing internal resources through energy bonds is a positive step. It is expected to strengthen the financial structure of the authority and contribute to long-term production growth and energy security.

Jalasarokar