Kathmandu: Hydroelectricity Investment and Development Company Limited(HIDCL) is preparing to transform itself into an infrastructure development bank. With limited investment scope independently on hydropower projects, the company’s management is preparing to transform the company to an infrastructure development bank.
According to Jeevan Kumar Basnet, financial analyst of the company, there was a preliminary discussion on moving ahead under the regulation of Nepal Rastra Bank due to the obligation to jointly invest with other commercial banks while making investment on hydropower projects.
The company has also held informal discussions with Nepal Rastra Bank, Ministry of Energy and Ministry of Finance in this regard. During the discussion, Nepal Rastra Bank was also positive, the company source confirmed. The company is also of the view that the capital required for the Infrastructure Development Bank after the issuance of right shares of the company. The company’s paid-up capital will reach Rs. 22 billion after the rights issue.
The finance ministry had last year raised the issue of dividends on advance-paid shares. The ministry had sought clarification from the then CEO Chhabiraj Pokhrel on the issue. As the company is more loyal to the Ministry of Energy than the Finance Ministry, the finance ministry does not seem to be interfering in the infrastructure development bank model. On the other hand, as the Ministry of Energy has the largest share capital, it seems to be the final decision maker in this regard.
On the other hand, the company is not in a position to invest by raising deposits or any other source other than its own capital. Due to this, the company has not been able to expand. Resources should be mobilized from the very beginning even in the project where construction work will start after three or four years. It may take 7-8 years for the money to be fully released.
Thus, the bank has to deposit billions of rupees in the form of deposits in the banks and distribute it to the shareholders by earning profit from the interest earned by the banks. The company says that it can invest in the hydropower project itself if the work is carried out in the modality of infrastructure development bank.