Shabda Gyawali's Blog

In my personal opinion the mechanism introduced by SEBON  will bring some cheer and some confusion. Although this is a good step towards Fair Market valuation, there are too many discretionary variables. In the coming days, if not already, SEBON might need to setup an Investment Committee or Panel of Expert to approve the assumptions being consider for  FPO valuation.   For example:  Discount rate needed to calculate Discounted Cash Flow will depends  on the risk adjusted return of the individual company. Discount rate will also differ from company to company even in the same industry .  Similarly, on the Terminal Growth Rate-  Terminal Value of a company that owns a limited life asset (Hydro), should and will differ from perpetual nature type business (Commercial Banks/ Insurance) .   For 180 days average trading  price method- I think it would be  better if the liquidity factor of the share traded is also considered, ...

I SSUES  42 GW  Hydro Potential ( Most of the project are ROR )  Only 700 - 800 MW harnessed  Investment of about $7 to 8 billion each year Limited capacity of Local Banks to finance all the capital required  Non recourse project financing still not being tried by Local Banks  Possible Solution Similar to Indian Masala Bonds  Rupees Denominate  offshore issue bond  For example: Comps like GMR issues INR Bond in offshore (London, New york), proceed use to finance hydro project in Nepal. PPA in NPR. Less foreign exchange risk   Backstop by DFIs including IFC and ADB RISK No sovereign Credit rating of Nepal  Local Law limits Interest rate charged for foreign Debt - LIBOR + 5.5  Counter party risk  Dropping Energy prices in India.. 

On 14 th November, 2015 government of Nepal announced that it will be distributing fuel wood to pacify the hardship of acute fuel crisis faced by Nepali due to the ongoing “unofficial” blockage, political protest and disturbances in the major transit points. This benevolent gesture from the government could perhaps be the biggest blow to the nation touted as “hydro energy power house of South Asia”. Distribution of Fuel wood as a tool to response to energy security re-exposes Nepal preparedness and commitment for the sustainable development of its economy. Similarity, Myriad of frustrated, and fatigued consumer lining up for days with a hope to get half filled cylinders and fuel tanks is a tight slap to the rhetoric and hallow narratives that Nepal has “potential” to exploit 42 GW of hydro energy. This is the same rhetoric which we as a nation have been humming since mid-sixties, but till date not even 1% of the “potential” has been executed into reality. With our myopic view...

We often here that once the Nepali power plant meet the domestic demand, surplus power will be exported to India.. Recently came across a report, which paint a very gloomy scenario of some of the power distribution companies of India, particularly state owned dis-com of states neighbouring Nepal .... Wondering how Nepali energy will complete will India Energy and revenue risk associated with unhealthy financial situation of the discom companies

·          Launching Government startup fund – organize business plan competition for pre fab housing protype, future natural disaster prevention, mitigation  app or technology. Provide seed capital to top 5…. ·          Legalize marijuana and encourage ganja puffing tourists. Will increase tax revenue and boost tourism. If stoned already no stone can do harm... :-) here is a proof  ·           Sovereign Credit Rating  – economic cost of earthquake estimated around 50% of the GDP.  Thats about US 10BN. Government can raise domestically about 3%- 5% of GDP (1BN) without raising any eye brows of IMF. Rest need to be financed through external source. To raise international debt a proper sovereign rating from credit rating agencies could be useful. Shadow rating (CCC+) we currently follow does not take into factor l...

As the rescue work is all most done, relief works are under-way, it looks like relief effort will wind  down in couple of weeks....Now the turn comes for RECONSTRUCTION..Before I start  writing my thoughts on RECONSTRUCTION, I would go back in time and highlight few macroeconomic figures and trends in  Nepal before the devastating earthquake Nepal’s economy grew by an estimated 5.2% in fiscal year (FY) 2014 - See more at:  Source: http://blogs.adb.org/blog/adb-s-initial-analysis-economic-impact-nepal-earthquake#sthash.tslN7qRq.dpuf Balance of payment  SURPLUS till first half of 2015 was USD 349.2 MN (ADB)  Gross foreign exchange reserves till mid jan 2015 was USD 7.1 BN Nepal had signed PTA with India  Nepal has signed PDA with couple of hydro projects  International Banks including Societe Generale was in Nepal for appraisal for a hydro project  Total Market cap for stock market was about USD  9 + BN ...