Arun Valley HDCL : First Hydropower Initiative of Nepali Investors

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Arun Valley HDCL : First Hydropower Initiative of Nepali Investors

AVHDCL is a company with a diversified investment portfolio. Besides hydropower projects, the company has invested in banks and other commercial sectors.

Established on March 12, 1998, Arun Valley Hydropower Development Company Limited (AVHDCL) is the first private sector initiative in Nepal by Nepali investors to produce hydroelectricity. The company jumped into producing hydroelectricity with the 800 KW Piluwa Khola Hydropower Project in Sankhuwasabha district of eastern Nepal. The construction of the project was completed in three years and it started commercial production in September 2003. 

The company was converted into a public limited company in 2005 and it floated 30 percent of its total shares to the public in June 2009. 

Nepali engineers carried out all the activities of the project - from detailed feasibility study to the environmental impact assessment. Following an optimization study, the project's capacity was increased to 3 MW. The construction cost of the 3 MW project came out to be Rs 345 million (per MW cost being Rs 115 million). It is one of the low-cost projects of Nepal. Of the project's total cost, Rs 192.5 million was raised from various banks and the Employees Provident Fund. 

Ridi Hydropower Project
After the successful commercial production from the Piluwa Khola project, the company started building the Ridi Hydropower Project of 2.4 MW in Gulmi district through its subsidiary company named Ridi Hydropower Development Company. Fifty percent shareholders of the project, moved forward with the slogan 'Hydropower through People’s Participation', are the citizens of the project-affected areas. 

Kabeli B 1
The 25 MW Kabeli B 1 is a hydropower project being developed by Arun Kabeli Power Ltd, a subsidiary company of AVHDCL. The plant of the project is located on the Kabeli River flowing through the border of Taplejung and Panchthar districts. According to the company, the project was supposed to start commercial production from mid-April this year but that wasn't possible due to the delay in the construction of the project's transmission line by Nepal Electricity Authority. The company aims to have maximum investment in the project through people's participation, according to Ramesh Prasad Dahal, managing director of AVHDCL. 

Future Projects
Currently, AVHDCL is carrying out the feasibility study of a cascade project Kabeli B 1. The company has also already received the survey license for Upper Kabeli Project of 9.3 MW. To move these projects forward, the company has already requested the Securities Board of Nepal (SEBON) to issue Further Public Offering (FPO).

AVHDCL is a company with a diversified investment portfolio. Besides hydropower projects, the company has invested in banks and other commercial sectors. “Diversification is necessary to minimize the investment risks,” says the company's chairman, Guru Prasad Neupane.

Financial Health
In the third quarter of the last fiscal year (2016/17), AVHDCL earned a net profit of more than Rs  45.5 million - 18 percent less than the profit the company made in the same period of the previous fiscal year (2015/16). In that period, the company earned Rs 41.047 million from selling power and more than Rs 14.7 million from other sources. The company's income from electricity sales decreased 21 percent. Similarly, the company's income from other sources decreased 10 percent. With the decline in income, the company's operating profit declined by 21 percent to Rs 45.5 million. 

Its paid-up capital, however, increased by 10 percent to around Rs 848.19 million in the last fiscal year and Rs 37.34 million has been collected in its reserve fund. The company's current assets and current liabilities stand at more than Rs 78. 51 million and Rs 20.1 95 million, respectively. In the period, the company's earnings per share stood at Rs 5.42. Meanwhile, the company is going to issue 3,157,883 units through FPO. A meeting of the company's board of directors on July 7 has specified the price of FPO to be Rs 301 per share which includes a face value of Rs 100 and a premium of Rs 201.

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