The initial public offering (IPO) of Upper Tamakoshi Hydropower Project was oversubscribed four times, belying fears of a low turnout due to the cost and time overruns plaguing the scheme, issue manager Citizen Investment Trust (CIT) said.
The initial public offering (IPO) of Upper Tamakoshi Hydropower Project was oversubscribed four times, belying fears of a low turnout due to the cost and time overruns plaguing the scheme, issue manager Citizen Investment Trust (CIT) said.
The 456 MW national pride project located in north central Nepal is being developed by a subsidiary of the Nepal Electricity Authority, the state-owned power utility.
The hydropower company launched its IPO of 15.8 million shares on Thursday, and by Monday when it closed, 346,166 persons had applied for 67 million shares worth Rs6.7 billion.
According to the issue manager, the shares will be allotted to the applicants in a couple of weeks. “As the office will close for the Tihar festival from tomorrow, we will make the share allotment after the holidays,” said Uddav Silwal, assistant officer at the CIT.
According to Silwal, officials of the hydropower company, the Securities Board of Nepal and the CIT will meet before the allotment to decide the modality. “There is a high chance that the shares will be allotted on a proportional basis to all applicants,” he said. If the allotment is done on a proportional basis, each applicant will get one-fourth of the number of shares applied for.
Although Upper Tamakoshi Hydropower Project has been successful in attracting a large number of investors, its performance is far from satisfactory, with the project office having to push back the completion deadline three times.
Last week, the project office extended the completion deadline by six months as it wasn’t going to be able to start operating one of its six turbines by December 2018 and complete the entire project by April 2019 as originally planned. As per the new deadline, the hydropower plant will start commercial generation of electricity by mid-November 2019.
The project office has cited earthquakes, the Indian trade blockade and various technical issues including dillydallying by one of the contractors as reasons for the delay in the national pride project where 95 percent of the construction works have been completed.
The intermittent delays experienced by the project have led to cost overruns.
The plant was initially planned to be built at a cost of Rs35 billion, but the final bill is now expected to reach Rs50 billion. The total cost will reach Rs70 billion if interest is added.
Nevertheless, the project is considered to be a role model project which is being developed with domestic resources and a high level of participation by project-affected locals and the general public.
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