Flood report will sharpen hydropower recovery bets

A clearer bill for traders

The government’s forthcoming flood assessment should give traders a firmer basis for judging hydropower recovery prospects. It will quantify the rebuilding requirement, but it will not by itself establish compensation or financing for individual projects.

The National Planning Commission and the National Disaster Risk Reduction and Management Authority plan to release the completed report before Tihar. More than 250 officials have gathered information for over a month across affected local wards in Rasuwa, Nuwakot, Dhading and Gorkha, dividing the review into 24 areas.

The estimate for reconstruction and restoration is about Rs 7 trillion, broadly in line with the earlier assessment. The commission said the final figure is expected to differ by only 3% to 4% from that preliminary calculation.

Hydropower terms remain decisive

Around eight privately run hydropower projects sustained substantial damage. The proposed response does not include direct cash compensation from the government. Instead, recommendations include rescheduling existing loans, easing access to fresh project debt and potentially having the state cover interest on new borrowing.

Another possible measure is to lengthen operating permits. A project with a 25-year licence could potentially receive a term of 28 or 30 years, subject to a government guarantee. Insurance would remain the route for project-loss claims.

Private businesses are estimated to account for about Rs 300 billion of the damage. The earlier estimate for rebuilding commercial establishments was Rs 45.45 billion. The government has also estimated that roughly Rs 7 trillion will be needed across the wider reconstruction effort, including infrastructure, agriculture, schools and hydropower.

NEPSE rose 1.18% to 2,695.6 on 29 October and was up 2.96% over 20 sessions. No project-level market data is available here, so the broad index move does not establish a signal for affected hydropower names.

What changes the picture

The next market test is the promised publication before Tihar, followed by formal decisions on loan restructuring, new-financing support and licence extensions. Those terms will determine whether the damage report translates into valuation support for affected projects or remains only a measure of the rebuilding burden.