The Securities Board of Nepal (SEBON) is again in controversy after it was alleged that commission was demanded for initial share issue (IPO) of hydropower companies. The hydropower promoters have demanded an investigation saying that the board, which has stopped the IPO permission of around 89 companies since 22 months, has mobilized middlemen to collect up to 7 percent commission. However, Sebon and the government have not taken this demand seriously.

IPPAN, the association of independent power producers, discussed the delay in the IPO approval and the impact of the bigbigiy of middlemen on Tuesday. Energy promoters conclude that there is a situation where they have to make a collective response to the middlemen who ask for commission.

'It's hard to say outside. Just yesterday, three promoters were asked for a commission, they asked what should be done," said Ganesh Karki, President of IPPAN, "Earlier it was 3 percent, now it is 5 to 7 percent. If this is the case, the project cannot be built.

43 hydropower companies that are planning to raise about 24 billion from the IPO, if they collect 5 percent commission, it will be 1.2 billion rupees.

We are in favor of completely discouraging middlemen. If the board does not listen to our demand, we will have to go ahead with the protest," said Karki, "The promoters are suffering because the IPO has been stopped for a long time, they should not cause more pain by asking for commission." 

Until Tuesday, 89 companies have applied for IPO permission worth 56 billion 793 million 27 thousand 132 rupees in the Securities Board. The largest number of them are 43 companies belonging to the hydropower group. The company has sought permission to issue 193 million shares worth 19.44 billion rupees. Among those who have applied to the board, there are 9 from hotel and tourism, 3 from investment group, 18 from production and processing, 1 from finance company, 3 from microfinance and 12 from other sectors.

According to IPPAN, 43 projects with a capacity of 1009.52 MW are awaiting IPO approval. 24 billion 84 crore rupees to be raised from the general public through IPO and rights shares by the electricity company has been stopped due to lack of permission from the board.

The promoters have to pay an additional 4 billion 96 million rupees in interest to the bank," said Vice President Uttam Vlon Lama, "The cost of the projects has increased to 21 billion 87 million 29 lakh 33 thousand. 55 billion 52 million 36 million income has been lost due to non-issue of shares.' 

On the other hand, the board has stopped the IPO of companies with less than 90 net worth citing the instructions of the Public Accounts Committee. But Lama says that permission has been stopped for hydropower projects with a net worth higher than that. "Despite repeated requests for permission to issue shares to companies with real net worth above 90, it has not been received," he said. 

Promoter Vijay Mohan Bhattarai said that because the board did not give permission for the IPO, the cost of the company has increased to more than 25 crores. "We have many problems. The future is dark if we all do not move together,” he said. IPPAN has also decided to form a 10-member committee to continuously fight against the activities of the board.

Ippan President Karki said that there is no place or entity that has not applied for IPO permission. In the meantime, the hydropower promoters have met President Ram Chandra Paudel, then Prime Minister Pushpa Kamal Dahal, Prime Minister KP Sharma Oli, former Prime Minister Sher Bahadur Deuba, then Finance Minister Prakashsharan Mahat and Varshman Pun, Finance Minister Bishnu Paudel, then Energy Minister Shakti Basnet, Energy Minister Deepak Khadka, top party leaders, parliamentary committee officials.

However, they allege that there was no hearing from anywhere, instead middlemen came and started asking for commission. Now a different thing (commission) came out. If permission is granted in doing so, the situation will be even worse," said IPPA President Karki. "The board should have said directly, whether to allow the IPO or not?" They should tell what the commission's allegation is. I challenge you to prove it. This is all planned propaganda, we have not missed anything, he said. 

The Securities Board is a public institution (capital market regulatory body) under the Ministry of Finance. When Kantipur inquired about the question being openly raised by the independent energy producers' organization on the working style of the board, the spokesperson of the Ministry of Finance, Shyam Prasad Bhandari, said that no information or complaint had been received about it. "If something like that happens, the relevant agency becomes a partner in the action according to the law," he said.

Securities Board was leaderless for 11 months after the tenure of the then chairman Ramesh Kumar Hamal ended on 21st December 2080. The approval of the IPO was completely stalled due to the absence of a chairman on the board. Former Prime Minister Pushpa Kamal Dahal and former Finance Minister Barshman Pun have been alleging that the UML-Maoist alliance broke up due to a disagreement over the appointment of the chairman. 

Four and a half months after the new UML-Congress coalition government was formed, the government appointed Santosh Narayan Shrestha as the board chairman. Since he became the chairman, eight companies in different sectors have received permission to issue shares. However, it is alleged that the criteria for allowing and stopping IPOs are not transparent.

Board Chairman Shrestha says on this charge, "Sometimes the previous company does not meet the standards, it is asked to meet the standards. Until that company meets the standards, the process of the next company has to be continued." Did you stop? 

It's been five months since I became president. I cannot answer why it was stopped for 22 months. Eight companies have received IPO permission in five months. 

When you were appointed as chairman, there were 82 companies applying for IPO, now there are 89. Is the working speed good? Companies that do not meet the

criteria will not be allowed. The board does not agree on the overall asset and liability assessment (Due Diligence Audit-DDA) of the company. Initially, DDA is done by the merchant banker for the company. Its report should also be examined by the mechanism of the board. Due to not reaching the minimum standards in the DDA of many companies, permission could not be granted.

The main objective of the board is to protect citizens' investments. Therefore, the received application should be carefully studied, researched and analyzed. That takes time. If the companies are quick, they will not give IPO permission to those who do not meet the standards. On the other hand, the board's job is not only to give IPO permission. As the company has grown, the capacity of the board has not increased. We are also working for capacity building. 

Are you trying to say that the IPO approval has been delayed because the indicators differed while testing the DDA report submitted by the company?

Some company's DDA report does not meet certain standards. In that case, the company is frequently contacted to meet those criteria. It takes time to get the standards from the company and get them re-examined by the board. For example, some file before but not the annual general meeting of the company. It takes time to hold a

general meeting. The board should be confident while giving permission for an IPO to a company. Because it is a matter of people's investment. What was happening before this, the question is being raised in three. We cannot move forward ignoring all of them.  Out of many companies in the

process, only 8 got IPO permission on what basis? 

Received applications are divided into groups. Allowed equally in all areas. Just because there are many companies in the hydropower sector does not mean that only they will be allowed. Sometimes the previous company's standard is not met, it is asked to meet the standard. Until that company meets the standards, the process of another company has to proceed. All the details of which company applied to the board, when it was reviewed, when insufficient documents were requested, when permission was given are mentioned on the website. We didn't work undercover. Those eight companies got permission because they met the criteria. The board may be questioned if a company is given permission that does not meet the standards. The board does not do the questioning. 

There is an allegation that the board gave IPO permission to a company that has just come in, leaving out the company that has been in the process for a long time, isn't it?

means anything. The functioning of the board has been done in a transparent manner. 

How long does it take for companies that have applied so far to get permission? 

We have not planned that we will give permission for the IPO within this time. The capacity of the board is reduced. Now let's speed up the work. 

It is alleged that people asked you for a commission for IPO permission?