| Author | Shakya, Nishesh |
| Call Number | AIT RSPR no.SM-07-56 |
| Subject(s) | Water-power--Nepal
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| Note | A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration in Management of Technology |
| Publisher | Asian Institute of Technology |
| Abstract | Nepal has a huge hydro power potential and recently, small hydro power has been mooted as a prosperous method of generating energy in the country. With the active participation of the private sector encouraged by the significant subsidy opportunities by the state, small hydropower (SHP) could be the answer to the countries acute energy deficiency and rural electrification. For any hydropower project understanding the project cycle is important because of the lumpy nature of these projects with huge initial capital investment required, relatively long gyration period and possible socio-economic and environmental impacts. Usually feasibility studies are prepared which are mostly very technical with little emphasis on operational and financial strategy to make the projects successful. So this business plan is focused on making a short hand introduction to the project with focus on project planning, evaluation and financing. The business plan is prepared to formulate attractive financial proposal for the external financers. The business plan is made for a 4.5 MW capacity Hewa-A small hydro project in Nepal which requires an initial capital investment of US$ 8.1 million with a debt-equity ratio of 80% to 20%. Of the total equity amount, 60% is to be raised through external investors. The money raised will be used for construction of the project that will take 34 months. In the first year of operation, the plant shall generate US $ 1.90 million as revenue with a saleable energy generation of 32.8 GWh. The cost per KW of energy generation is $1800. The project is financially and technically viable with minimal environmental adverse impact. The pay back time for the bank loan is 7 years. The company will distribute dividend with pay out ratio of 0.50 from the second year of revenue generation. With the 60% of the equity investment, the investors will get a 40% ownership of the project. The NPV of the project is US $ 6.12 million; the IRR of the project is 16. 29% and IRR for equity investment is 74.58% for the base case. The annual break even energy generation for first seven years is 23 .4 GWh. After a couple of projects, the company hopes to be listed in the stock exchange and go public. The IPO is the most favorable exit strategy with an option of shares being bought back by the company shareholders. |
| Year | 2007 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Igel, Barbara |
| Examination Committee(s) | Kauranen, Ilkka;Tang, John C. S. |
| Scholarship Donor(s) | AIT Fellowship |
| Degree | Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2007 |