This report explains how the recent heavy floods in the Rasuwa and Trishuli regions have impacted various hydropower companies, their stock performances, and the prospects of their recovery based on past incidents.
The devastating floods in the Bhote Koshi and Trishuli river areas of Rasuwa have caused severe damage to several hydropower projects, and this impact is now clearly visible in the stock market. Share prices of companies that are directly and indirectly affected, such as Rasuwa-Gadhi Hydropower, Chilime Hydropower, Upper Mailung Khola, Mailung Khola, Trishuli Jal Vidhyut Company, and Sanjen Hydropower, have seen a major drop.
The biggest fall was seen in Rasuwa-Gadhi Hydropower. Before the floods, the share of this company was trading around Rs. 240, but now it has dropped to around Rs. 88. After the floods, the price had even touched as low as Rs. 75.
Chilime Hydropower saw its share price drop by about 15 percent. Upper Mailung Khola Hydropower and Mailung Khola Hydropower dropped by around 20 percent. The share price of Trishuli Jal Vidhyut Company also went down by nearly 20 percent, while Sanjen Hydropower fell by around 14 percent.
Structure Damage and Blocked Transmission Systems Affect Production
The recent floods have affected the hydropower projects in Rasuwa and Nuwakot in different ways. Some projects have suffered direct damage to their headworks, powerhouse, tunnels, and other physical structures. For some other projects, even though their main structures are safe, electricity production has stopped because transmission lines and substations got damaged.
The damage to the 220 KV transmission line and the related substation in the Trishuli area has directly stopped the electricity production of Chilime and other connected projects.
A hydropower project is a connected system of many parts like headworks, intake, tunnel, penstock pipe, powerhouse, turbine, generator, substation, and transmission lines. Therefore, we cannot say that a project is completely destroyed just because one part of it is damaged. However, Rasuwa-Gadhi Hydropower has indeed suffered very heavy damage in many of its key structures.
Huge Damage in Rasuwa-Gadhi and Better Safety for Sanjen
The biggest impact of the flood was seen on Rasuwa-Gadhi Hydropower project. There is massive damage in various structures starting from the headworks all the way to the powerhouse area.
The structures built near the Trishuli river faced direct hit from the flood. The headworks, site office, and powerhouse areas are all severely affected. Because of this, Rasuwa-Gadhi Hydropower will need a lot more time and heavy investment to start running again compared to other affected projects.
On the other hand, the projects under Sanjen Hydropower have suffered relatively less impact. Under the Sanjen group, there are projects like Upper Sanjen of 14.8 Megawatt and Sanjen of 42.5 Megawatt. According to the details sent by company to the authorities, the main structures of these projects are safe. Since their headworks, powerhouse, and substations are located a bit far from the main flood-prone area, the damage is very less.
Chilime and Trishuli-3 Projects Also Affected
For Chilime Hydropower, the headworks area is safe but the powerhouse and site office areas faced big impact from the flood. The powerhouse area, which is situated on the banks of the Trishuli river, has suffered damage. During the flood, saving the lives of workers inside the powerhouse was also a very big challenge.
Similarly, the powerhouse area of Upper Trishuli-3 ‘B’ project, under Trishuli Jal Vidhyut Company, has also been damaged by the flood. There are reports of damage to its headworks and tunnel areas as well. Upper Trishuli-3 ‘A’ project, which is also located in the Trishuli river corridor, faced direct flood impact. However, it will take more time to calculate the actual cost of damage in these projects.
How Past Damaged Projects Recovered and Ran Again
Investors of these affected projects have a natural question in their mind: Can these damaged projects run again? Past flood incidents in Nepal show that damaged projects can start running again after proper reconstruction.
For example, Mandu Hydropower faced huge damage to its headworks and powerhouse during the floods in Ashoj 2081. Mud, sand, and stones filled the tunnel, and power production was totally stopped. Even though the project remained closed for a long time, it was later successfully restarted. The reconstruction cost was about Rs. 98 crore, out of which around Rs. 58 crore was received from the insurance company. This insurance claim also covered the physical damage and the loss of profit during the shutdown period. After that, the company invested more money and even increased its capacity from 22 Megawatt to 32 Megawatt. This shows that projects can return to normal operations even after big natural disasters.
Another example is Upper Hewa Khola Hydropower, which faced big damage from Hewa Khola floods in Ashad 2080. The power production was stopped for about six months. The damage was about Rs. 25 crore, and they received around Rs. 10 crore from insurance. The company took extra loans from banks for the remaining money. Later, the project restarted and the company announced to distributing dividend to shareholders as well. Although its share price dropped for some time after the flood, it later recovered very well along with the rising market.
Not All Projects Face Same Situation and Insurance Role
These examples show that all flood-affected hydropower companies do not face the same situation. Some projects might restart in a few months, while others might take a very long time to reconstruct. The actual time to restart depends on the level of damage, insurance money, bank loans, management speed, and the status of transmission lines. Some projects like Mountain Hydro Nepal, which was affected by the Hewa Khola floods, did not see huge long-term drops in share prices. However, the speed of restarting varies from company to company.
This big damage in hydropower can also affect non-life insurance companies. For Mandu Hydropower, Rs. 58 crore insurance was paid for Rs. 98 crore damage, and for Upper Hewa Khola, Rs. 10 crore was paid for Rs. 25 crore damage. But a single insurance company does not have to bear all this risk alone. Insurance companies that insure hydropower projects also do reinsurance. Since risk is shared with reinsurance companies, the full burden of big damage does not directly fall on one insurance company. So, investors should closely watch the financial impact on non-life insurance companies along with hydropower companies.
Panic Trigger in Weak Market and Future Outlook
The share market was already falling before the floods. This devastating flood created more negative impact on investor psychology. After the floods, the Nepse index dropped to 2518 points during intraday trading, but later recovered to close around 2570 points. So, the floods should be seen as a panic trigger added to an already weak market, rather than the only reason for market fall. Selling pressure increased because of the psychology that the market will go down further.
For the future of these shares, we should not evaluate the current drop only based on temporary damage. The actual damage, insurance money, reconstruction cost, bank loan status, and time taken to restart will decide the future share prices. Since government entities like Nepal Electricity Authority have investment in companies like Rasuwa-Gadhi, Chilime, and Sanjen, their institutional support can be very helpful in reconstruction.
Investors should not make decisions just by looking at the company name or past share prices. They must look at actual damage assessment, insurance claims, reconstruction plans, loan burdens, and when production will restart. The current drop is not necessarily permanent, and recovery will depend on physical reconstruction and company management results.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
