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Chilime IPO Still Doldrums: Expected within Chaitra
09, Mar 2010

Chilime hydropower, the high priced hydropower company at Nepal Stock Exchange had decided to issue 23, 04,000 units ordinary share to public at premium of Rs. 323.70 from 15th June 2009 (2066 Ashad 1). Chilime which was established with the national investment and capital (no international funds) has total capacity of producing 20MW electricity. Nepal Electricity Authority is the highest shareholder of Chilime with 51% of holdings followed by 25% by its employees which has already been listed in secondary market. However, the issue to public was allocated to only 24 percent.

Just a day before the issue of ordinary share, the Supreme Court issued a notice to withheld the IPO of Chilime after the case filed from the locals of Rasuwa district appealing the company did not allot shares to local people as per the earlier agreement. The company had decided to provide 5% of total public issue to the locals lower than their demand of 8%. Since from the period, the IPO of chilime that has congregate the interest of many investors shutter down in absence of thorough provision on the issue.

After more than seven months of IPO halting, Securities Board of Nepal (SEBON) revised the existing provisions in the Securities Registration and Issue Regulations by altering five percent cap on allotment of public shares to local people in hydropower and manufacturing projects excluding financial institutions.


According to Lila Nath Bhattarai, managing director of Chilime, SEBON had recommended increase in the stakes of local people in the project to 10 percent. "This is a good decision" and possibly would open door for issuing IPO. However, the provision is under the super vision of Ministry of Finance."

I believe that, the IPO of Chilime might come within this month of Chaitra if everything goes well. However, it depends upon the MOF when will the amendment on provisions comes into existence. Nevertheless, the ministry of finance have assured us to pass the ordinance very soon and opened us the door to issue public share, he further added.

In a questioned asked, how much percent of share will Chilime give to the local peoples after the pass of ordinance, he replied, previously SEBON rule restricted us to exceed 5% share to locals which was below their demand of 8%. But, if once the ordinance comes in to action, we will certainly resolve the problem and issue shares to public as soon as possible.


Short Glimpse of Chilime (source: Chilime website)

Chilime Hydropower Company Limited (CHPCL) is a subsidiary company of NEA with 51% equity ownership. The Company was established in 1996 with the objective of promoting the utilization of resources within the country for the development of hydropower. Chilime Hydroelectric project with installed capacity of 22.1 MW and located at Rassuwa district was built and commissioned by this Company on August 25, 2003 (2060/05/08 BS). The Project is now in fifth year of commercial operation. The project has delivered 528.63 GWh of electrical energy to NEA since August 2003. In FY 2006/07, the project was successful in delivering 104.5% of the Contract Energy to NEA.

CHPCL is now executing four more hydroelectric projects which are at various stages of development. The feasibility study of two projects, Upper Sanjen Hydroelectric Project (11 MW) and Sanjen Hydroelectric Project (35 MW) have been completed and application has been submitted for the power purchase agreement (PPA) with NEA. Both of these Projects are located upstream of the existing Chilime HEP. Local people in the project area are very eager to participate in the implementation of these projects. A Letter of Intent for financing in Upper Sanjen HEP has already been received from citizen Investment Trust. Construction of these two Projects will be started as soon as the construction license is issued by the Ministry of Water Resources.

CHPCL has also completed the feasibility study of Middle Bhotekoshi Hydroelectric Project (80 MW) located in Sindhupalchowk district. Local people of Sindhupalchowk distric and other organization will be participating in the development of this project. CHPCL has Feasibility Study License of Rasuwagadi Hydroelectric project (75 MW) in the Rassuwa District. CHPCL is committed to develop more of medium and large scale hydroelectric projects in future with greater participation from various sector in the country.

Jamb News Service

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