NEA moves closer to IPO as finance ministry greenlights proposal

KATHMANDU: The Ministry of Finance has given the green light to the proposal presented by the Nepal Electricity Authority (NEA) for the issuance of shares to the general public at a premium price. Having secured financial approval, the Ministry of Energy, Water Resources, and Irrigation is scheduled to submit the necessary proposal to the Cabinet for final approval.

The plan, championed by Executive Director Kulman Ghising, has received widespread enthusiasm. It earmarks up to 10% of the NEA’s authorized capital for public shares, providing an opportunity for increased public participation. The NEA’s authorized capital stands at Rs. 300 billion, and the move aims to enhance transparency and involve the public in the national utility’s ownership.

According to the proposal, the book value of each share is approximately Rs. 125, with an additional premium. Prospective investors will need to invest Rs. 250 for each share they wish to acquire. In the fiscal year 2078/79, the NEA recorded Rs. 175 billion in share capital and a reserve fund of Rs. 27 Arba, resulting in a net worth of Rs. 202 bollion, earmarked for this share issuance.

ICRA Nepal, a credit rating agency, has reaffirmed a credit rating of AA+ for the IPO issuance of Nepal Electricity Authority. This rating indicates a high degree of safety regarding timely servicing of financial obligations, reflecting very low credit risk associated with the NEA’s IPO.

Morevoer, tailored to sustain the burgeoning electricity demand of eleven urban centers until the horizon of 2050, this strategic undertaking is designed.