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CONTENTSCompany Profile 04Vision, Mission and Values 06Strategic Goals of the Company 06Ethical Principles 07The BPC Code 07Integrated Quality, Health, Safety and Environment Policy 09Organizational Structure 09Highlights of the Year 10Financial Highlights 11Board of Directors 12Message from the Chairperson 14Report from Board of Directors 16CEOs’ Perspective 28Corporate Governance 30Management Discussion & Analysis 42Enterprise Risk Management 56Senior Executives 60Shareholders Information 65Corporate Social Responsibility 66Health, Safety & Environment 68Sustainability 70BPC Subsidiaries 72Five Year Financial Summary 80Award and Recognition 82Our Presence 84Financial Statements 2019Auditor’s Report 86Statement of Financial Position 88Statement of Profit and Loss 90Statement of Cash Flow 91Statement of Changes in Equity 93Notes to the Financial Statement 94Consolidated Financial Statements 2019Auditor’s Report 132Statement of Financial Position 133Statement of Total Comprehensive Income 135Statement of Cash Flow 136Statement of Changes in Equity 138Notes to the Financial Statement 139Group Consolidated Financial Highlights 185Summary of Financial Position of BPC Subsidiaries 186Summary of Profit and Loss Account of BPC Subsidiaries 187List of Abbreviations 188ANNUAL REPORT 2018-20193

COMPANY PROFILEButwal Power Company (BPC) was incorporated in1965, standing today with 54 years of experiencein the hydropower sector and has placed itselfas one of the leading listed company in Nepal.Generation and distribution of electricity is itscore business areas and has also been engagedin development, operation and maintenanceof hydro-power plants, engineering and designconsultancy of hydropower and infrastructureprojects, manufacturing and repair of hydromechanical and electro-mechanical equipment forpower plants through its subsidiary companies.BPC has a track record of pioneering multi-facetedcapacity building initiatives in al Power CompanyLimitedRegistration NumberPa. Li. No. 3-049/50Date Incorporated29 December, 1965 (2022/09/14BS)Date converted into a publiclimited company17 February, 1993 (2049/11/06BS)Date privatised3 January, 2003 (2059/09/19 BS)Registered/Corporate officeGangadevi Marga-313,BuddhaNagar, Kathmandu, NepalPAN /VAT Number500047963BankersStandard Chartered Bank Ltd.,Himalayan Bank Ltd., SunriseBank Ltd., NIC Asia BankLtd., Sanima Bank Ltd., NepalBangladesh Bank Ltd., NepalInvestment Bank Ltd.Statutory AuditorCSC & Co., CharteredAccountantsInternal AuditorPL Shrestha & Co., CharteredAccountantsStock Exchange ListingNepal Stock Exchange (NEPSE),Code BPCL4ANNUAL REPORT 2018-2019Pursuing the privatization process in 2003, theGovernment of Nepal handed over majority of itsownership and management control to privateinvestors on public-private partnership (PPP) model.BPC is registered with the Securities Board of Nepaland listed in Nepal Stock Exchange Limited.Starting with electrification of a small city in thesouth central Nepal developing Tinau project (1MW), BPC is the only enterprise which can lookback to a five decade long history of success,sustained growth and capacity building in thecountry with 34 MW equivalent under operationand 50 MW under construction progress throughseparate SPVs.BPC owns and operates Andhikhola (9.4 MW)and Jhimruk (12 MW) plants located in westernNepal. BPC owns majority stake in Khudihydropower plant (4 MW). It is also constructingtwo hydropower projects Nyadi (30 MW) andKabeli A (37.6 MW) through separate SPVsNyadi Hydropower Limited and Kabeli EnergyLtd respectively. Lower Manang MarsyangdiHydroelectric Project (LMMHEP), 140 MW, locatedin southern region of Manang District, is underpreparation stage. Through joint venture companywith three Chinese partners have acquired UpperMarsyangdi-2 Hydropower Project (327 MW) andManang Marsyangdi Hydropower Project (135MW) in the Marsyangdi river downstream andupstream of LMMHEP with a view to develop themin cascade with LMMHEP.BPC received survey license and is conductingfeasibility and EIA study for 160 MW MuguKarnali Hydropower Project (MKHP), located nearGamgadhi, the district headquarter of Mugu district.Prefeasibility study of MKHP has been completedand identified various options of PROR schemes forwhich the most optimum option will be chosen tocarry out detail feasibility study and EIA.BPC formed a joint venture company named, SCIGInternational Nepal Hydro Joint DevelopmentCompany Pvt Ltd with three Chinese Companiesof Chengdu, Sichuan Province, People’s Republicof China. Marsyangdi cascade projects togetherwith LMMHEP have been undertaken by the jointventure company and preparations ongoing tomove the projects into construction throughrespective SPVs.BPC has 16.88% share ownership in KhimtiHydropower Project (60 MW) owned byHimal Power Limited together with partnersStatkraft Norfund Power Invest AS (SN Power) &Bergenshalvoens Kommunale Kraftselskap (BKK).BPC also has ownership with some other partnersin Hydro Lab which specializes in hydraulicmodel study of hydropower projects, sedimentanalysis & efficiency measurements. Nepal Hydro& Electric Limited, a subsidiary of BPC, has anexpertise in design, manufacturing, installation,testing and commissioning of heavy penstock pipe,hydraulic gate, trash rack, stoplog, micro and minihydro turbines, housing and casing of mediumsize turbines, HV substations, galvanised steeltelescopic pole and heavy steel bridge etc.BPC established Hydro-Consult EngineeringLimited (HCE) which provides consultancyservices in water resource based infrastructuredevelopment respecting the local socio-ecological

systems. It investigates designs and assists todevelop hydropower projects in Nepal, Pakistan,Kenya with an excellent business results with itsprofessionals.BPC is implementing integrated managementsystem with certification of ISO 9001:2015(Quality Management System), ISO 14001:2015(Environmental Management System) andOHSAS 18001:2007 (Occupational Health andSafety Management System) recognized by theCertification Body, DNV GL (Det Norske Veritas).BPC has been awarded for its best managedcompany in hydropower sector and receivednational best presented annual report awardcontinuously 11 years from ICAN. BPC iscommitted to operational excellence and believesin good governance, corporate citizenship andcreating value for stakeholders.ANNUAL REPORT 2018-20195

VISION, MISSIONAND VALUESVISIONMISSION"To be a leadingenterprise in PowerSector with excellencein providing innovativeand quality productsand services to meetthe growing demandfor efficient and cleanenergy."nnnnnnVALUESTo be a competitive hydropowerdeveloper and an electric utilityTo secure sustainableperformance of our investmentsTo be committed to protect theenvironmentTo practice corporate socialresponsibility by serving thecommunities where we dobusinessTo provide a safe, healthy andfulfilling work environment forour employeesTo maximize value for allstakeholdersnnnnCustomer focus – Weseek to understand thecustomers’ needs andstrive to deliver the best asprofessionals.Transparent – We aretransparent in our businessand financial transactions.Proactive – We exploreand look for solutions,opportunities, partnershipsto improve our business.Team Work – We worktogether with mutualrespect and trust to achieveresults.STRATEGIC GOALS OF THE COMPANYIn order to become the industry leader andachieve operational excellence, BPC hasembraced the following Strategic Goals:nnnANNUALREPORTREPORT2018-20192018-20196 6 ANNUALContinuous focus on a strong financialperformance in terms of reasonable returnon investment through maximizing the useof financial capabilities in terms of assetutilization, optimized resources utilization,risk management and the diversification ofthe Company’s investment portfolio in otherbusiness areas.Expand the businesses mainly through thedevelopment and acquisition of powergeneration facilities in the sustainable greenfield of hydropower and in other renewableprojects of mid and large-size for the domesticand cross-border markets, respectively.Improve the business operation or increaseproductivity through the prudent and dynamicmanagement practices including timelyorganizational restructuring, well-definednnprocesses and the latest technologies thatcreates favourable environment for teamworkto enhance core competency and institutionalmemory.Develop and strengthen workforcecompetency to ensure excellence inperformance through identification anddevelopment of skills and knowledgenecessary for the Company to succeed as acommercial enterprise, ensure right people inright roles and opportunity for career growth,instil customer-focused internal and externalbusiness relationship and manage and retainknowledge and expertise.Efficient and optimum use of environmentalresources along with focus on improvedoccupational health and safety and continualimprovement in the Quality and EnvironmentalManagement System.

ETHICAL PRINCIPLESWe strive to exercise the highest standards ofethics and conduct in our personal and businessrelations with ensuring compliance to legalframework, fairness, integrity, honesty andenvironmental impacts of our acts and theinterests of stakeholders.BPC Code of ethics applies to all employees.Each one at BPC is expected to behave accordingto the principles contained in the BPC Codeand is expected to adhere to the standards andrestrictions set forth in this code; avoid anddiscourage actions that would imply companyactivities in violation to the code. All at BPC mustpromote and support BPC Code in day-to-daybusiness activities. We encourage consultationand advice as appropriate from the resourcesavailable in application of the BPC Code. Breachof BPC Code may result in severe disciplinaryaction such as suspension or termination.THE BPC CODE1 Abide by the applicable laws & regulationsgoverning our business.n Comply with applicable laws and governmentregulations.n Do business only with suppliers, clients andpartners that comply with legal requirements.n Screen transactions against applicable rules.2. Be honest, fair and trustworthy in allbusiness activities and relationship.n Uphold trust placed in us as professionals andensure delivery of quality services that reflectprofessional capabilities.n Provide competitive and equal opportunity tosuppliers and contractors.n Abide by special contract clauses agreed withany agency.n Do not make any unauthorized substitutionsafter entering into contract without the writtenapproval of the authorized representative ofthe party.n Reject inappropriate pressure from clients orothers.n Protect proprietary and confidentialinformation related to company or employees.n Be truthful and maintain accurate records.n Adhere to internal control system, company’spolicies, principles and business processes.3. Avoid conflicts of interest between workand personal affairs.n Use and process personal data for legitimatebusiness purpose only.n Do not use confidential information forpersonal gains.n Do not divulge or provide “tip” on any pricesensitive information to anyone including toany friends and relatives.n Do not engage in activities that adversely affectcompany’s interest or line of business.n Do not use company property or opportunitiesencountered through use of company propertyor by virtue of association with the company orposition for self-interest or to any third party.n Self or members of immediate family mustnot compete against the company or use theirposition to influence or derive improper benefitfor themselves or others.n Do not accept or give extravagant gifts orentertainment from or to companies doingbusiness with the BPC or group companies.n Do not accept fees or felicitation in exchangeof services provided on behalf of the company.ANNUAL REPORT 2018-20197

6. Strive to protect the environment.n Comply with all applicable environmental lawsand regulations.n Prevent pollution and conserve water &energy.4. Foster an atmosphere in which fairemployment practices are extended toevery member of BPC.n Employment decisions must be based on jobrequirement, qualification and merit withoutregard to race, religion, nationality, sex, age,disability or other characteristic protected bylaw.n Provide a work environment free ofharassment.n Respect privacy rights of employees byprotecting personal data. While seeking tomaintain employee privacy, BPC reserves theright to monitor use of company propertyincluding PCs, emails, phones, proprietaryinformation etc. applicable as per law.n Encourage & support professional developmentof employees and promote individualachievements and continuous learning inpursuit of company’s objectives and goals.5. Strive to create a safe workplace.n Create and maintain safe workingenvironment.n Comply with occupational health & safety rulesand regulations.n Manage risks to address the security ofemployees, facilities, information, assets andbusiness continuity.8ANNUAL REPORT 2018-20197. Corporate Social Citizenshipn Maintain good relationship with neighboursand communities where we do business.n Account for managing social impacts of ourbusiness activities in all business proposals.8. Practice a culture where ethical conduct isexemplified and valued by all employees.n Identify and protect intellectual property.n Respect copyrighted materials and otherprotected intellectual property of others.n Follow BPC accounting procedures and ensureaccurate accounting and financial reporting.n Maintain accurate and updated accounts toappropriately reflect all business transactiontransparently.n Reject all unethical or illegal businesspractices.n Remain committed to open and honestcommunication.n Be responsible for keeping our professionalknowledge up-to-date and sharing bestpractices.n Deliver and welcome feedback onperformance and conduct regularly, candidlyand constructively.n Nurture integrity, respect and teamwork.n Build relationship with each other based onshared trust and confidence.

INTEGRATED QUALITY, HEALTH, SAFETYAND ENVIRONMENT POLICYBPC is committed to provide quality andcompetitive products and services to meetcustomers’ expectations and to ensure healthand safety at work by conducting business in anenvironmentally & socially responsible mannerthrough:nnnContinual improvement of IntegratedManagement System and Business ProcessesIdentification of occupational health and safetyhazards and minimizing potential risks toprevent injury and ill health.Conservation and optimization in use of keyresources, minimizing impact on environmentand prevention of pollution.nnnnnnEffective preparedness and resourcedeployment to ensure minimal impact fromemergency situations.Compliance with the applicable legal and otherrequirements.Qualified and trained work force for effectiveimplementation of QHSE management system.Effective communication of policyrequirements with internal and externalparties.Participation of business partners inimplementation of QHSE management systemsby making them aware of their obligations.Periodic review of the policy to ensure itsrelevancy and appropriateness to the company.ORGANISATIONAL STRUCTUREGeneration, Distribution and Transmissionbusiness activities are being carried out by BPCdirectly. Project development activities are carriedout through Special Purpose Vehicles (SPVs).The Engineering, Manufacturing, Operation& Maintenance of hydropower equipmentbusinesses are carried out through subsidiaries. Board of DirectorsThe functional organizational structure is inplace viz. Operations, Business Development andProject, Finance and Corporate under the directsupervision of CEO. The overall responsibilityof management resides with the CEO, who isresponsible to the Board of Directors.Audit CommitteeRisk Management CommitteeAssets and Liability CommitteeFinance CommitteeCEOCEO's OfficeVP- OperationVP- BusinessDevelopment &ProjectsVP- CorporateCompany Secretary& Legal Advisor Business Development& Projects Human ResourceGeneral AdministrationProcurement VP- FinanceGenerationDistribution AccountFinanceANNUAL REPORT 2018-20199

HIGHLIGHTS OF THE YEARnnnnnnnnn10Net worth increased by 6.0%Profitability increased by 8.27%100% ownership acquired of ManangMarshyangdi Hydropower Company (P)Ltd for development of 135 MW ManangMarsyangdi Hydropower Project (MMHEP)20% ownership acquired of HimtalHydropower Company (P) Ltd. to develop327 MW Upper Marsyangdi-2 HydroelectricProject (UM2HEP)Generation Licenses of MMHEP and 140 MWLower Manang Marsyangdi HydroelectricProject (LMMHEP) have been received75% construction of Nyadi HydropowerProject (30MW) completedNumber of distribution consumers underBPC’s increased to 56194 with an addition of2173 new consumersHuman resource optimization throughMutually Agreed Retirement Scheme (MARS)National Best Presented Annual Report 2018received from ICAN.ANNUAL REPORT 2018-2019

0.110.082075/76 0.052074/752073/740.21RETURN ON CAPITAL 7244722134530282.82075/76(In NPR)2071/72293.42432074/752073/74238BOOK VALUE PER 762071/728142074/75DIVIDEND PER SHARE (In NPR)2071/7210.0%2074/752073/74CURRENT RATIO12.9%10.3%7.29104%2072/73NET PROFIT 732071/72NET WORTH (In NPR Million)2071/722075/762074/752073/74GROSS OPERATING PROFIT MARGIN2071/72702.32074/75NET PROFIT (In NPR Million)2072/73 A (In NPR 0.95%42.44%2072/732075/7639.11%2071/72FINANCIAL HIGHLIGHTSEARNING PER SHARE (In NPR)INVESTMENT (In NPR Million)DEBT TO EQUITY RATIOANNUAL REPORT 2018-201911


From left to right (standing):Mr. Dinesh Humagain, DirectorMr. Bijay Bahadur Shrestha, Alternate DirectorMr. Om Prakash Shrestha, DirectorDr. Sandip Shah, DirectorMr. Pradeep Kumar Shrestha, DirectorMr. Sanjib Rajbhandari, Alternate DirectorFrom left to right (sitting):Mr. Tirtha Man Shakya, DirectorMr. Bijaya Krishna Shrestha, DirectorMr. Padma Jyoti, ChairmanMr. Sandip Kumar Dev, Director

The government has takencertain policy and legal reforminitiatives for attractinginvestment in the hydropowersector and providing levelplaying field to the private sectorto meet its target generation of15000 MW in ten years.14ANNUAL REPORT 2018-2019

MESSAGE FROM CHAIRPERSONThe history is always in the process of making. The year 2018/19 has beenrecorded as a successful year in the history of the Company with the increasein net profit by 8.27% and investments by 70.19% by maintaining earnings pershare at NPR 31.15 and declaring 28% dividend to shareholders, which is thehighest declaration in the category of hydropower companies in Nepal.The journey ahead of the Company is challenging interms of maintaining the aspiration of shareholdersand materializing its growth prospects. Theconstruction of 30MW Nyadi Hydropower Project is inthe verge of completion. The construction of 37.6MWKabeli-A Hydroelectric Project has been halted dueto termination of contract agreement with civil andhydro-mechanical works owing the non-performanceof the contractor. Marsyangdi Cascade Projects(MM,LLM and UM2) are at the stage of PPA, PDA andfinancial closure. 160 MW Mugu Karnali HydropowerProject is under study phase. Khimti-I HydroelectricProject has been a major source of revenue forBPC, which will be diluted after July 2020 underthe requirement of transferring of 50% ownershipinterest in this project to NEA and signing of new PPA.The Company has initiated reform

Standard Chartered Bank Ltd., Himalayan Bank Ltd., Sunrise Bank Ltd., NIC Asia Bank Ltd., Sanima Bank Ltd., Nepal Bangladesh Bank Ltd., Nepal Investment Bank Ltd. Statutory Auditor . analysis & efficiency measurements. Nepal Hydro & Electric Limited, a subsidiary of BPC, has an

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