17th February 2025, Kathmandu
The Independent Power Producers Association of Nepal (IPPAN) has expressed concerns over the suspension of IPOs and rights issues for 42 companies. This disruption is affecting over NPR 50 billion in public offerings.
Nepal Hydropower IPOs Halted 2025
The problem arises from incorrect directives issued by the Audit Committee of Nepal’s Parliament. As a result, the country’s energy sector is facing significant challenges.
Audit Committee Oversteps Its Mandate
IPPAN President Ganesh Karki met with Shyam Kumar Ghimire, the Chief Whip of the Nepali Congress, to highlight the Audit Committee’s overreach in directing the Nepal Securities Board (SEBON). The Audit Committee instructed SEBON to require a 90% “real net worth” for companies seeking IPOs, a term not recognized internationally in accounting standards. According to IPPAN, nearly all of the 42 companies applying for IPOs had a net worth higher than 90%, but they were still denied approval.
Negative Impact on Hydropower and Related Industries
Former IPPAN President Shailendra Guragai emphasized that the halted IPOs have caused more than just a delay in hydropower projects. He explained that businesses providing materials like cement to hydropower projects have seen a significant downturn, leading to a broader economic slowdown. Guragai warned that these setbacks will limit economic growth and discourage much-needed investment in critical sectors such as energy.
Legal Setbacks and Development Delays
IPPAN also raised concerns about legal challenges that hinder infrastructure development. Karki criticized the Supreme Court’s decision to annul ordinances that had been passed to facilitate development, which he argued set Nepal back by 52 years. He pointed out that laws amended through ordinances to make them more business-friendly had been overturned by the court, making the country less attractive to investors.
Energy Bill and Its Impact
Karki further discussed the Energy Bill, which proposes reducing the license period for hydropower projects from 50 years to just 35 years. He expressed concern that this could harm public investment and discourage future projects. The reduction in the license period would force projects to transfer ownership to the government after 35 years, undermining the confidence of investors and citizens who have already invested in these projects.
Support for Private Sector Growth
During the meeting, Ghimire promised to take IPPAN’s concerns to Parliament. He emphasized the importance of supporting the private sector, which he said is essential for economic growth. Ghimire criticized the prevailing socialist mindset, which often views profit-making entrepreneurs as criminals. He argued that such views have delayed Nepal’s development, and the government must allow businesses to thrive for the country to prosper.
This meeting highlights the pressing need for policy reforms to support economic development and facilitate the growth of private-sector investments in Nepal’s energy and infrastructure sectors.
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