IPPAN Demands Separate IPO Regulations for Hydropower Sector from SEBON

23rd September 2026, Kathmandu

The Independent Power Producers’ Association, Nepal (IPPAN) has formally requested the Securities Board of Nepal (SEBON) to review the draft of the General Eligibility Guidelines for Public Issues, 2083.

IPPAN Demands Separate IPO Regulations

IPPAN submitted a suggestion letter to SEBON, arguing that the proposed provisions could hinder capital management, public issue processes, and investment continuity in the hydropower sector. IPPAN President Mohan Dangi stated that given the capital-intensive nature of energy projects and their direct link to economic development, regulatory frameworks should not create barriers to investment.

IPPAN urged SEBON to introduce a dedicated chapter and checklist tailored specifically to the hydropower sector rather than applying a uniform standard across all industries.

IPPAN’s Objections to Operational Requirements and Net Worth Limits

IPPAN highlighted several practical difficulties regarding operational status and net worth thresholds for hydropower developers issuing IPOs.

Removal of Operational Mandate

IPPAN called for removing the requirement that hydropower companies must be in continuous business operation prior to issuing an IPO. Since hydropower projects are considered operational only after construction is complete and electricity generation begins, this provision would prevent projects under construction from raising capital when capital requirements are highest. IPPAN suggested allowing companies with around 65 percent physical progress to apply for an IPO.

Net Worth Threshold Revision

The draft requires an issuing entity’s net worth per share to be no less than face value. IPPAN urged SEBON to remove this for hydropower companies, noting that project net worth can drop below 90 rupees due to depreciation during construction. IPPAN warned that keeping this requirement intact could block nearly 60 percent of hydropower projects from issuing IPOs, recommending that approval be granted for net worth as low as 90 rupees based on power value, combined with full disclosure, underwriting, and credit rating.

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Debt-to-Equity Ratios, Fit and Proper Tests, and Discretionary Clauses

IPPAN raised concerns over SEBON’s proposed regulatory reach into financial structuring, promoter background checks, and discretionary powers.

Debt-to-Equity Ratio Determination

IPPAN requested the complete removal of provisions allowing SEBON to determine sector-specific debt-to-equity ratios and interest coverage metrics. The association argued that capital structure is finalized through agreements with lending banks, and requiring secondary approval from SEBON creates redundant regulatory hurdles.

Scope of Fit and Proper Test

IPPAN urged SEBON to limit “Fit and Proper” testing to board directors and executive management, rather than thousands of individual promoter shareholders. It noted that disqualifying an entire company’s IPO due to a single promoter being blacklisted is unfeasible and unfair to other investors.

Elimination of Discretionary Authority and Extra Audits

IPPAN called for removing clauses that allow SEBON staff to impose additional conditions at their discretion, citing concerns over potential administrative irregularities. It also requested the removal of provisions mandating SEBON-led legal reviews or forensic audits of private contracts between developers and contractors, as well as redundant environmental and technical evaluations.

Timeline Benchmarks, Rejection Criteria, and Legacy Pipeline Protections

To ensure regulatory predictability, IPPAN proposed binding evaluation timelines and protections for existing IPO applicants.

• Timebound Processing Requirements: IPPAN urged SEBON to establish a strict 15-day limit for initial application reviews, 7 days for reviewing requested supplementary documents, and a 45-day window for detailed evaluations, ensuring a final decision within 60 to 90 days.
• Clarity on Environmental Risks and Rejection Grounds: IPPAN requested the removal of environmental risk evaluations from SEBON’s scope, as environmental regulation falls under other government agencies. It also asked SEBON to define vague rejection phrases such as “financial condition against public interest” with measurable benchmarks.
• Protection for Existing Pipeline Projects: IPPAN demanded that hydropower companies that have already submitted IPO applications under the Public Issue Guidelines, 2074, be processed under the previous rules, along with a transitional period for new compliance.

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