Independent Power Producers’ Association, 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 mid-May 2023, 43 Initial Public Offerings (IPOs) and 7 rights offerings — equivalent to projects with a combined capacity of 975 MW — have been stalled. As a result, 50 companies have been unable to move forward with project construction.
Based on IPPAN’s study, outlined in a letter sent to SEBON on Thursday, the delay in share issuance has prevented NPR 23.27 billion worth of shares from being floated in the market. Additionally, the delay has led to an interest burden of NPR 12.40 billion, increased project costs by NPR 24.30 billion, and caused a revenue loss of NPR 71.78 billion.
IPPAN stated that SEBON has been delaying share approvals, citing reasons such as the absence of a board chairperson and new requirements like maintaining more than 90 percent net worth, which are not mentioned in any law. During this period, SEBON has approved only 10 IPOs and 11 rights offerings.
In his letter to SEBON, IPPAN Chairperson Ganesh Karki noted that many companies have already applied for IPOs and are waiting for approvals. The letter requested SEBON to immediately re-include previously removed applicants, fast-track IPO approvals post-construction, and stop implementing separate International Securities Identification Numbers (ISIN) for promoters and the general public. Despite repeated appeals to SEBON, the Prime Minister, and the Finance Minister, IPPAN complained that no action has been taken. With the formation of the new government, IPPAN has again urged SEBON to resume the long-stalled process of share issuance.
The construction of hydropower projects requires large capital investments. Current securities regulations allow developers to apply for IPOs only after completing 60 percent of construction. IPPAN argued that as hydropower promoters reduce bank loans by factoring in IPO proceeds during financial planning, IPO issuance during the construction phase is crucial to cut costs. The association added that rejecting IPO applications until electricity production begins — without clear legal or policy backing — is both wrong and unlawful.
Additionally, IPPAN criticized CDS and Clearing Limited (CDSC) for its decision to provide separate ISIN numbers for promoters and the general public. As a result, shares of some hydropower companies that already completed public issuance have not been listed on NEPSE for six months. This, according to IPPAN, discourages investments from Non-Resident Nepalis (NRNs) and international investors, and should not be enforced.
IPPAN also reminded SEBON of the 12-point agreement signed between the two sides on September 10, 2023, aimed at strengthening institutional governance in the securities sector, making the energy industry more transparent and disciplined, and addressing public grievances. The association reaffirmed its commitment to governance provisions, including not opening the lock-in period before electricity generation, requiring subsidiary companies to have PPAs and financial closure before issuing rights shares, and ensuring 65 percent completion before IPO issuance.
