Kathmandu. Speculation is rife that the process of merger between Hydropower Investment and Development Company Limited (HIDCL) and Nepal Infrastructure Bank (NIFRA) may begin.
Finance Minister Swarnim Wagle on May 29, 2083. With the announcement of the budget for 84 years, there is talk that HICL and NIFRA may go for merger. In the budget, the government has set a target to make HIDCL a specialised body in the infrastructure sector with a suitable financial institution.
HIDCL has been investing in hydropower infrastructure development while NIFRA has been providing loans for infrastructure development including electricity. Infrastructure development is a priority for both of them.
The government holds 50.75% shareholding in HIDCL. Employees Provident Fund, Citizen Investment Trust and Rastriya Beema Sanstha have 5.09 percent share in the company, while others hold 13.65 percent share.
HIDCL has been investing in the form of debt or equity in hydropower and renewable energy generation, transmission and distribution projects. It also invests in hydropower and renewable generation, transmission, and distribution projects through banks and financial institutions.
The company invests in bonds and debentures issued for projects related to hydropower and renewable energy and also attracts investors to develop hydropower and renewable energy projects by establishing subsidiaries under its ownership.
The main objective of HIDCL is to manage loans or disburse loans for projects received from the Government of Nepal or other domestic and foreign institutions.
On the other hand, the government of Nepal is the largest shareholder of NIFRA. The government holds 10 percent stake in NIFRA.
Similarly, NIFRA has 20.43 percent stake in commercial banks, 19.42 percent of life and non-life insurance companies, 5 percent of industrialists and entrepreneurs, 5.15 percent of private and public companies and 40 percent of the general public.
The main objective of NIFRA is to promote public-private partnerships (PPAs) in infrastructure development, infrastructure-related businesses and other such sectors.
Mobilize and utilize resources for financing infrastructure development, including in the country’s infrastructure-related sectors, encourage private sector participation (PSP) in infrastructure projects, enterprises and activities for the sustainable economic development of the country, become a key partner of the Government of Nepal for the country’s infrastructure planning and development, and multilateral financial institutions, financial institutions of different countries for equity and debt financing in the country’s infrastructure projects, The main objective of NIFRA is to liaise with the Government of Nepal and private entrepreneurs.
The objective of HIDCL and NIFRA in the development of physical infrastructure in the country seems to be more or less. The government has also set a target to make HIDCL a specialized body in the infrastructure sector by merging it with a corporation with similar objectives through the budget for the coming fiscal year.
Therefore, it is possible that the merger process between these two institutions can start in the near future.
In the event of a merger between HIDCL and NIFRA, the operating cost may decrease and the investment in infrastructure can be further expanded. Because if the capital of both companies is combined, it will be more than Rs 50 billion.
