There are plans to invest an additional Rs 300 billion in the next 10 years. However, IPPAN has said that for the past 28 months, the issuance of IPOs and rights shares has been delayed due to the Securities and Exchange Board of Nepal (SEB).
What you should know
Energy promoters have said that the project construction has been affected as even hydropower companies that have met the criteria have not been able to issue initial public offerings (IPOs). The promoters gave this information at a press conference organized by the Independent Power Producers Association (IPPAN) on Wednesday.
They have invested about Rs 1.5 trillion in completed, under construction and upcoming projects. They plan to invest an additional Rs 3 trillion in the next 10 years. However, IPPAN has said that the IPO and right share issuance have been delayed for the past 28 months due to the Securities and Exchange Board of Nepal. This has not only discouraged private sector investors but has also created local obstacles in the construction of the project.
Similarly, they say that if the management of giving IPO only after the project generates electricity is implemented, local problems will worsen as local investment in the project is not timely. IPPAN claims that the recent incident of the 45 MW Bhotekoshi project, which stopped electricity production for a month by demanding 10 percent shares in the name of locals, has confirmed this. This has confirmed the inevitability of IPPAN's suggestion to the Securities and Exchange Board of Nepal and the Government of Nepal to immediately proceed with the issuance of shares of hydropower projects during the construction of the project.
To make the energy sector responsible and more accountable, a 12-point agreement was signed between the Securities and Exchange Board of Nepal (SEBON) and IPPAN on Bhadra 24, 2080 with the aim of enhancing institutional good governance and making the energy sector more systematic and dignified. In which, the agreement was made with a commitment to institutional good governance such as the locking period of shares will not be opened until the lights are turned off, the subsidiary company must have completed PPA and financial management to issue rights shares, and 65 percent construction must be completed to issue IPO. However, while such an agreement is being implemented, the SEBON, which should facilitate the private sector, has delayed the issuance and sale of securities of hydropower companies, which has created a situation that is seriously affecting Nepal's energy development and expansion.
IPPAN claims that since the beginning of 2080 (the past 28 months), IPOs of hydropower companies have not been issued regularly. So far, 43 companies with a total of 975 MW are awaiting IPO shares and 7 companies are awaiting rights shares, and 50 companies have not issued shares on time, resulting in the loss of 23.27 billion 8 lakhs in securities. Due to this, the energy sector has lost 108.5 billion rupees, according to promoters.
Due to which, interest has increased by 12.40 billion 54 lakhs, costs have increased by 24.30 billion 67 lakhs, and revenue income has been lost by 71.78 billion 81 lakhs (based on IPPAN's study), according to IPPAN.
In addition, the term "real net worth", which is not practiced anywhere in the world and is not included anywhere in Nepal's law, and the fact that such a net worth should be above 90, has been excluded from the IPO application. This has also started to cause serious problems in overall energy development, the statement said.
IPPAN is an umbrella organization of energy producers. IPPAN's main objective is to identify the problems of energy entrepreneurs and take initiatives with the relevant bodies to solve them. IPPAN currently has more than 570 energy producing companies as members.
While the country's electricity generation capacity has reached about 3,700 megawatts (MW), the capacity of projects built by the private sector has reached about 3,500 MW, while various projects of about 5,400 MW are under construction by the private sector.
