Our Message From CEO

CEO thoughts on Hydropower

CEO, SADICHCHHA KARKI

At the outset, I thank all the stakeholders who have reinforced trust in us. We are thankful to all partners who have joined us in our challenging endeavor in the energy platform. Our employees and communities have been on our side through this journey, despite weather and health emergencies. The regulators and policymakers have given us a patient hearing, understood our concerns, and responded very positively. Further, I place my gratitude to the Board of Directors who believed in me in this journey of delivering value to all our stakeholders and contribute to the sustainable development of Nepal.

The energy sector is viewed as Nepal’s key sector with regard to future inclusive economic growth and realization of development goals as formulated in government policy documents. Although small, we intend to contribute to rural electrification. Besides quantitative targets for electricity generation, transmission and distribution the Government restates its commitment towards a more efficient use of energy. Our business has been aligned to contribute to UNSDG 7- affordable and clean energy.

Despite continuous endeavors by the Government and support by the Development Partners the energy supply in Nepal is still insufficient, and a significant obstacle for the social and economic development of the country. It has been our attempt that communities residing in the vicinity of our projects/ power stations and unprivileged sections of the society are empowered economically as well as socially. Karnali Province has the lowest growth rate in the country with an annual economic growth rate of 5.7% and contributes the least to the GDP at 4.1%. The province is among the poorest in Nepal with an estimated 28.9% of people living under absolute poverty (second highest in the country) and 51.7% of the people are multidimensionally poor (highest in the country). The unemployment rate in the province stands at 9.7%, which is the third lowest in the country. We are certain that we are in the right place and at the right time.

The energy policy of Nepal has a clear policy of maximizing hydropower utilization to meet domestic electricity demand and the promotion of private sector participation. Various subsidy mechanisms are in effect to provide access to energy and energy-efficient technologies. In this setting, we have a positive news to shareholders; the income from the project is exempted from income tax for the first 10 years. Hydropower projects are exposed to various challenges and risks including but not limited to residual project implementation and funding risk, hydrology risk associated with run-of-the-river power generation, exposure to volatile interest rate risk and regulatory risk. To mitigate such risks we have Insurance coverage to the entire structure, machinery, equipment, and tools. The key strength of the company is its robust, skilled, experienced employees and a pack of the resilient promoters and Board of Directors. We have regulatory advantage over sufficient span for electricity generation (generation license and PPA). We continue to deliver by following good governance practices, employee commitment, and community involvement. We continue to dedicate towards research and study of the feasible hydropower projects in Nepal and develop many sustainable hydropower projects in the near future. Because the bulk of electricity demand for household uses, industrial and domestic demand is expected to grow in the future along with rapid urbanization and a growing number of energy-intensive industries.