Kathmandu — Independent Power Producers’ Association of Nepal (IPPAN) has claimed that investors in the energy sector have lost more than NPR 108.5 billion due to delays by the Securities Board of Nepal (SEBON) in approving share issuances.
According to IPPAN, since May 2023, IPOs and rights offerings of 50 companies—43 IPOs and 7 rights issues—have been stalled, affecting hydropower projects with a combined capacity of 975 MW currently under construction.
In a study-based letter sent to SEBON on Thursday, IPPAN outlined the financial toll: NPR 23.27 billion worth of shares could not be issued on time; interest costs increased by NPR 12.4 billion; project costs rose by NPR 24.3 billion; and expected revenues worth NPR 71.78 billion were lost.
SEBON has been delaying approvals, citing reasons such as the absence of a board chairperson and requirements like companies having over 90% net worth before issuance—conditions not explicitly mandated by law. In this period, only 10 IPOs and 11 rights issues have been approved.
In his letter, IPPAN President Ganesh Karki urged SEBON to immediately resume the pending IPOs, including those previously removed from the pipeline, warning that producers may be forced to launch protests if the issue remains unresolved.
IPPAN noted that repeated appeals to SEBON, the Prime Minister, and the Finance Minister have gone unheard. With the new government in place, the association has renewed its demand to move forward with halted issuances.
Hydropower projects require significant investment, and regulations allow companies to apply for IPOs after completing 60% of construction. Developers typically plan financing based on expected IPO proceeds, reducing reliance on bank loans. Hence, IPPAN has demanded that IPOs be allowed during the construction phase to lower costs.
The association also criticized SEBON’s new policy of accepting IPO applications only after power generation begins, calling it “illegal and counterproductive,” as it contradicts both existing rules and the recommendations of the High-Level Economic Reform Commission.
In addition, IPPAN objected to CDSC’s requirement of issuing separate demat IDs for promoters and general investors, which has delayed share listings of already-issued hydropower IPOs for more than six months. This, they argue, discourages non-resident Nepalis and international investors from entering the market.
The letter also referenced a 12-point agreement signed between SEBON and IPPAN on September 10, 2023, which aimed to improve governance, enhance transparency, and address public concerns in the energy sector. IPPAN reaffirmed its commitment to governance standards such as maintaining share lock-in periods, requiring power purchase agreements and financing arrangements before rights issues, and allowing IPOs only after 65% project completion—but urged SEBON to stop imposing additional, unlawful hurdles.