Aarati Power’s Issue and Banking Rating Remains Intact, 14.5 MW Upper Irkhuwa Khola Project in Final Construction Stage

लगानी न्यूज

१४ श्रावण २०८३, बिहीबार १५:५५July 30, 2026

. Aarati Power Company Limited (APCL) has maintained its Issue Rating and Banking Facility Rating. Care Ratings Nepal has again achieved “Care NP BB Minus” Issue Rating, “Care NP BB Minus” rating of Long-Term Banking Facility and “Care NP A Four” rating of Short Term Banking Facility. The total banking facility of the company has decreased from Rs 2.12 billion to Rs 1.85 billion.

The 14.5 MW Upper Irkhuwa Khola Hydropower Project, which is being constructed by Arati Power in Bhojpur district, has reached the final stage of construction, according to Care Ratings.TAG_OPEN_div_28 The project has a total estimated cost of Rs 2.83 billion, of which 63 percent will be loan and 37 percent will be self-capitalized. The company will have a debt of Rs 1.80 billion and an equity of Rs 1.03 billion.

By the end of February 2026, the physical progress of the project has reached about 97 percent and by March 2, 2026, Rs 2.58 billion has been spent, which is about 91 percent of the total cost.TAG_OPEN_div_26 However, CARE Ratings noted that the project will be completed within the stipulated cost and timeframe is still a major risk. The commercial operation date (RCOD) of the project has been set for March 10, 2028. If the project fails to come into operation within the stipulated time, the company will have to pay a penalty equivalent to 5 percent of the revenue that can be earned during the delay period. If there is a delay of more than 6 months after RCOD, the facility related to the increase in the tariff will also be affected.

CARE ratings have pointed out fluctuations in water flow, seasonal dependence of power generation and impact on income as significant risks as the project based on river flow. It is mentioned that the company’s income could be affected due to adverse water flow as the production is high in the rainy season and less in winter. According to the company, the construction of about 132 KV transmission line with 10.2 kilometers length will be crucial for the company’s financial condition to evacuate the generated electricity to Shitalpati Substation of Nepal Electricity Authority at Sankhuwasabha.

Due to Nepal’s geographical location, the risk of natural disasters like floods, landslides and other natural disasters is high in hydropower projects and this can affect the construction and operation of the company, according to Care Ratings.TAG_OPEN_div_22 However, there are plenty of factors that will strengthen the company’s rating, according to Care Ratings. The company’s promoters and management team are experienced in the hydropower sector, long term power purchase agreement, the risk of the opposition is moderate and the company has provided a positive base to the company as it has the support of the government in the energy sector.

The company’s chairman Bharat Bahadur Khatri is a lawyer with more than two decades of experience while director Birendra Bahadur Neupane has more than three decades of experience in the construction and hydropower sector.TAG_OPEN_div_21 Executive Director Prakash Dulal has also been active in the hydropower sector for more than a decade. The promoter group is also involved in other hydropower projects, according to CARE Ratings.

Arati Power Pvt. Ltd. signed a 30-year PPA with Nepal Electricity Authority (NEA) on July 17, 2018 for the sale of 14.5 MW of power.TAG_OPEN_div_19 As per the agreement, the rate has been fixed at Rs 4.80 per unit in the rainy season and Rs 8.40 in the winter season. The base tariff will be increased by 3 percent annually for the first eight years. As per the annual agreement, the project is expected to generate 90.57 million units of electricity and plant load factor is 71.31 percent.

According to Care Ratings, the government of Nepal has prioritized the energy sector, exempting tax, encouraging private investment and requiring banks and financial institutions through the Nepal Rastra Bank to disburse minimum loan in the energy sector.TAG_OPEN_div_17 The demand for electricity has been growing by 11 percent annually in the last five years and the agreement between Nepal and India to export 10,000 megawatts of electricity in 10 years also indicates positive long-term prospects of the energy sector.

Established on January 13, 2016, Arati Power Company Limited is developing the Upper Irkhuwa Khola Hydropower Project in Bhojpur in boot model.TAG_OPEN_div_15 Presently, the company has a long-term loan of Rs 1.80 billion, working capital facility of Rs 50 million and bank guarantee of Rs 1.9 billion.