Private power producers have accused the Securities Board of Nepal (Sebon) of causing massive financial losses to the energy sector by delaying approval for public share offerings. 

The Independent Power Producers’ Association of Nepal (IPPAN) has claimed that the delay in approving initial public offerings (IPOs) for hydropower companies has cost the industry more than Rs 108bn. According to IPPAN, Sebon has stopped granting IPO approvals to companies with a per-share net worth below Rs 90, citing instructions from the now-dissolved Public Accounts Committee of the House of Representatives. 

As many as 43 hydropower companies with a combined installed capacity of 975 MW are awaiting IPO clearance, while seven others are waiting for the Sebon’s nod to issue rights shares. Because of the delay, these 50 companies have been unable to raise Rs 23.27bn from the capital market. IPPAN added that the delay has led to an additional Rs 12.4bn in interest payments, project cost overruns of Rs 24.3bn and lost government revenue amounting to Rs 71.7bn.

IPPAN has given a 15-day ultimatum to the capital market regulator to address its demands. It has warned that hydropower producers would launch a protest if the government fails to act. The association also objected to Sebon’s introduction of the term “real net worth,” which it said is not mentioned anywhere in Nepal’s laws or international financial practice. Under this criterion, Sebon has rejected IPO applications of companies like Richet Hydropower, Beni Hydropower, Unique Hydel, Yambling, Laughing Buddha and Puwa Khola, IPPAN officials claimed.

“This has created serious problems in the overall development of the energy sector,” IPPAN President Ganesh Karki said. “The private sector would be forced to pursue legal and protest actions if the issue is not resolved soon. The delay by Sebon, the influence of middlemen and lack of transparency in government decisions have eroded private investors’ confidence.”

Private producers generate around 3,050 MW out of Nepal’s total installed capacity of 3,700 MW. Projects with a combined capacity of 5,416 MW are under construction. According to IPPAN, Rs 1,500bn has already been invested in the sector. In addition, projects with a combined capacity of around 9,000 MW have applied for power purchase agreements (PPAs), while feasibility studies are underway for projects totaling 12,000 MW.