Finance Minister Rameshwar Prasad Khanal has said that hydropower companies should continue to receive IPO approvals under the existing law. He explained that although there were suggestions to allow IPOs only after electricity production begins, no such law has been passed yet.
Meeting with IPPAN
On Monday, a delegation from the Independent Power Producers’ Association of Nepal (IPPAN) met the finance minister to discuss long delays in IPO approvals.
IPPAN President Ganesh Karki said the Securities Board has blocked IPOs of hydropower companies for the past 28 months, causing financial losses of more than one trillion rupees to promoters and the state.
IPPAN’s main concerns
- Over 40 companies in the pipeline, with IPOs worth more than Rs 23 billion, are waiting for approval.
- Hydropower companies should not be forced to meet net worth requirements to issue IPOs.
- The board’s decision to reject IPO applications until power production starts has no legal basis and must be canceled.
- Rules already state that IPO applications can be made after 50% construction is completed, and approvals after 65%.
- Problems with duplicate BOID numbers have stopped some listed hydropower shares from trading in NEPSE, which needs fixing.
Financial and legal struggles
Many hydropower firms had taken bank loans against their IPO approvals. With the current blockade, banks are demanding loan repayments, and projects are struggling to move forward.
IPPAN urged the minister to solve these issues quickly, as many projects close to completion are facing delays and heavy financial burdens.
Dispute over power purchase agreements
IPPAN also raised concerns over the “take-and-pay” system included in the budget for run-of-river projects. They said this has stopped even small projects of less than 10 MW from signing regular PPAs. Over 13,000 MW of projects waiting for PPAs are now in limbo. They asked the minister to open up the PPA process again.
Customs and local taxes
IPPAN further pointed out that although the Electricity Act allows import of spare parts at only 1% customs duty, the government has been charging 28% in the past two years. They also complained that local governments are imposing taxes and demands for shares without legal grounds.
Minister’s response
Minister Khanal said his earlier suggestion to allow IPOs only after production was just a proposal, not law. Since Parliament has been dissolved and no new law has been created, companies must continue to get IPO approval under the existing rules.
