Nepal Electricity Authority has decided to issue Initial Public Offerings ( IPO ) worth 31.25 billion to general public. It is equivalent to 25% of its shares. As the issue amount is large, the proposed amount will be first collected from corporate houses and business persons. The collected amount will be used to build the transmission lines and increase energy production.
In order to be eligible to issue IPO, the company must have made profit in the last three years and should have positive reserve. Although the company has met the first requirement, it still has the negative reserve. So the company might need two years to convert negative reserve into positive one.
The company has a paid up capital of 125 billion Nepalese Rupees. And has invested in companies like Upper Tamakoshi, MW Rasuwagadhi, Upper Sanjen and several other hydropower projects. In recent times, NEA has become one of the profitable government owned organization which was a loss making company in the past.
After issue, IPO of Nepal Electricity Authority ( NEA ) will be the largest IPO of Nepal till date. According to Kulman Ghising, the company will focus on improving financial health by reducing operational cost, electricity leakage and by increasing sales. The company also plans to introduce smart meters and encourage online payments for better customer service.