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The long-term bank loan credit rating of Jagdulla Hydropower Company Limited, the developer of the 106 MW Jagdulla Peaking Run-of-River Hydropower Project under construction in Dolpa, has been reaffirmed.

CARE Ratings Nepal has reaffirmed the company’s ‘CARE-NP BB’ rating for its NPR 16.18 billion long-term banking facilities.

According to CARE Ratings Nepal, the project remains in the early stage of construction, leaving it exposed to significant execution risks. The report states that the project’s financial progress has reached around 7%, while pre-construction activities are currently underway.

The total project cost is estimated at NPR 23.595 billion, with a financing structure of 69% debt and 31% equity. Of the required NPR 16.18 billion in debt financing, only NPR 12.5 billion has been secured so far. CARE noted that financial risks remain, as the company still needs to arrange the remaining debt and raise equity through an initial public offering (IPO) for the general public and project-affected local communities.

The company aims to begin commercial operation by June 10, 2029. According to the report, a delay of more than six months beyond the scheduled date could reduce the tariff escalation benefits available under the Power Purchase Agreement (PPA), potentially affecting project revenue and returns.

CARE Ratings also highlighted hydrological risks, noting that electricity generation will fluctuate between the monsoon and dry seasons because the project is based on river flow. However, the project’s six-hour peaking reservoir is expected to partially mitigate this risk by enabling electricity sales at higher tariffs during the dry season.

The report further identified transmission infrastructure as a key risk. The project’s electricity will be evacuated through an approximately 50-kilometre, 132 kV transmission line to the Bafikot Substation, which is being constructed by the Nepal Electricity Authority (NEA). Any delay in completing the transmission infrastructure could affect project commissioning. The project also faces risks from natural disasters, including landslides and floods.

CARE Ratings stated that the company’s ownership structure supports its credit profile, as it includes the Government of Nepal and government-backed institutions. The project’s major promoters include the Vidhyut Utpadan Company Limited (VUCL), Hydropower Investment and Development Company Limited (HIDCL), the Nepal Electricity Authority (NEA), the Karnali Provincial Government, and local governments.

The company has already signed a 30-year “Take-or-Pay” Power Purchase Agreement (PPA) with the Nepal Electricity Authority. The project is expected to generate approximately 623.5 million units (kWh) of electricity annually.

CARE Ratings concluded that government incentives, including tax concessions for reservoir and semi-reservoir hydropower projects, along with policies promoting investment in Nepal’s energy sector, will provide additional support for the project’s long-term viability.

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