January 14: Nepal Electricity Authority (NEA) is preparing to sell its ordinary shares by issuing Initial Public Offerings (IPO) worth Rs 60 billion. The state-owned NEA is one of the public institutions that is becoming financially strong in recent days.

The NEA is planning to restructure the financial structure of the organization and sell the shares to the general public in accordance with the Nepal Electricity Authority Act, 2041.

The Ministry of Finance has already given consent for the sale of shares. After the approval of the Finance Ministry, the Ministry of Energy, Water Resources and Irrigation is preparing to submit a proposal in this regard to the Council of Ministers.

The meeting of the Board of Directors of the NEA held on December 11 took a decision to this effect. The Board of Directors of the NEA has agreed to maintain the authorized capital of Rs 300 billion.

The NEA has decided to request approval from the Council of Ministers through the Ministry of Energy to issue shares to the general public at a premium price of up to 10 percent of the proposed authorized capital, maintaining the price per share up to twice the net worth. The decision has been submitted to the Ministry of Energy by the Executive Director of the Authority, Kulman Ghising, on January 4.

Shakti Bahadur Basnet, the Minister for Energy, Water Resources and Irrigation, who is also the chairman of the Board of Directors of the NEA, said that the shares are going to be issued with the aim of making the public institution more powerful. Prior to this, the government had also sold the shares of Nepal Telecommunications to the general public.

NEA has proposed to maintain the book value of its shares at around Rs 125 and add the same amount of premium to issue shares. Therefore, the common people who want to buy shares of the NEA will have to spend Rs 250 per share.

The authorized capital of the NEA at present is equal to Rs 125 billion.

The NEA has concluded that the budget allocated by the government is insufficient to increase its capital investment. Therefore, the NEA has to raise investment through alternative sources.

NEA is preparing to use various financial tools as an alternative source for financial management. The NEA has realized the need to increase its capital through ordinary shares, corporate bonds, debentures, green bonds, etc.

The NEA has pledged to use the funds raised by issuing shares to the general public as a long-term investment in construction of reservoir projects, expansion and strengthening of transmission and distribution lines.