Energy Investors Warn of Mounting Losses as IPOs Stall Under House-Enforced Rule

The Independent Power Producers’ Association, Nepal (IPPAN), has urged the government to immediately resolve the delay in approving IPOs and rights share issuances of hydropower companies, saying the prolonged obstruction by the Securities Board of Nepal (SEBON) has discouraged private-sector investors.

The delay stems from SEBON’s decision to enforce the “net worth” rule requiring companies to maintain a per-share net worth of at least Rs 90 , a provision introduced under the directive of the now-dissolved House of Representatives.

Organising a press conference in Kathmandu on Wednesday, IPPAN said the Securities Board of Nepal (SEBON) has failed to approve share issuances for the past 28 months, seriously affecting investment and growth of the energy sector.

IPPAN President Ganesh Karki said 43 companies with a combined capacity of 975 megawatts are awaiting approval to issue IPOs, while seven companies are awaiting permission for rights shares issues — totaling Rs 23.27 billion in securities that have yet to be floated.

“Due to the delay, the energy sector has lost Rs 108.50 billion, while interest costs have risen by Rs 12.40 billion and project costs by Rs 24.30 billion. The government has also lost potential revenue worth Rs 71.78 billion,” he said.

Karki objected to SEBON’s decision to reject IPO applications from companies such as Richet Hydropower, Beni Hydropower, Unique Hydel, Yambaling, Laughing Buddha, and Puwa Khola Hydropower on the grounds that their “real net worth” was below Rs 90 per share. IPPAN said the concept of “real net worth” — recently applied by SEBON — has no basis in existing laws or international practice.

IPPAN also criticized SEBON’s policy of allowing IPO issuance only after hydropower projects begin production, calling it impractical and shortsighted. The association argued that companies should be allowed to issue shares during the construction phase, as the law permits, to mobilize equity and secure financing.

“Developers often use funds raised from IPOs as part of their equity to obtain loans from financial institutions,” said IPPAN General Secretary Balram Khatiwada. “But under the new policy, such projects face growing financial stress.”

IPPAN expressed concern over the recent trend of locals obstructing projects by demanding 10 percent free shares. Citing the case of the Bhote Koshi Hydropower Project, where locals halted electricity generation for 32 days, causing Rs 320 million in losses, IPPAN warned that such unlawful demands could jeopardize investment in the energy sector.

The association said it will draw the attention of the Prime Minister, Finance Minister, Energy Minister, and SEBON Chair if its demands are not addressed promptly. It is also preparing to file cases against the SEBON Chair for removing companies from the IPO list based on the “real net worth” rule, lodge a complaint with the Commission for the Investigation of Abuse of Authority (CIAA) seeking compensation of Rs 108.50 billion on behalf of investors, and launch a protest within 15 days if no action is taken.