SEBON Mandates Power Generation: Hydropower IPOs Delisted Without ‘Lit Bulb’ in Nepal

28th May 2025, Kathmandu

The Securities Board of Nepal (SEBON) plans to delist hydropower companies from the IPO pipeline if they have not started electricity production. This move follows a stricter enforcement of IPO standards under the government’s new economic reform agenda.

SEBON Mandates Power Generation

IPO Approval Now Depends On Power Generation

Previously, companies could apply for IPOs after completing 50% of their construction. Under the new rule, firms must start generating electricity before launching their IPO. SEBON officials say this approach ensures accountability and protects public investors.

Economic Reform Action Plan Drives Change

The new standard follows the “Economic Reform Implementation Action Plan 2082,” led by the Office of the Prime Minister and Council of Ministers. SEBON is moving quickly to put this directive into effect.

Companies Without ‘Lit Bulb’ Face Removal

SEBON uses the term “lit bulb” to describe projects that have started power generation. Companies that fail to reach this stage will be removed from the IPO pipeline. This policy marks a major shift in how hydropower firms access public funding.

Earlier Delistings Set The Stage

SEBON had previously removed companies from the IPO pipeline if they failed to meet the NPR 900 million net worth requirement. Now, the same logic will apply to firms without operational power plants.

Dozens Of Projects May Be Affected

Reports suggest over 30 hydropower companies in the IPO pipeline may face delays or delisting. Many of these firms are still under construction and depend on public offerings to raise funds for final development.

Investor Protection Remains Top Priority

Leaders from the Nepal Investors’ Forum have welcomed the policy. They believe requiring operational proof before IPO issuance increases transparency and reduces risk for retail investors. According to them, the new rule aligns with investor interests.

Concerns For Small And Medium Developers

However, some experts worry the rule could hurt smaller hydropower projects. These firms often rely on phased financing, using IPOs to fund the final stages of development. Without IPO access, they may face serious cash flow issues.

Industry Analysts Call For Gradual Transition

Analysts suggest a phased approach. Immediate implementation could disrupt financing for promising projects. They recommend allowing a grace period for companies already in the pipeline.

Digital Governance Boosts Enforcement

SEBON says it will use digital tools to monitor and verify project status. This helps ensure only qualified companies reach public investors. It also improves transparency in the IPO approval process.

Government Pushes For Accountability

The stricter IPO rule reflects the government’s focus on accountability in economic reforms. By making SEBON the first body to enforce the plan, the government sets a strong example for other agencies.

Policy Sets New Benchmark For Readiness

The requirement to begin power generation before IPO approval introduces a new benchmark for project readiness. It moves the market toward funding only viable and near-complete projects.

Investors Regain Confidence

Market experts say the new policy could restore confidence in hydropower investments. With better screening, IPOs will reflect a company’s true value and reduce the chances of default or delay.

Sustainable Financing In Focus

The shift in policy promotes sustainable project financing. It discourages speculative investment and encourages companies to reach completion before seeking public funds.

Impact On Capital Market Dynamics

While some companies may struggle under the new rules, the overall market may benefit. Transparent and operationally strong projects will attract more stable investment.

Stronger Projects Will Prevail

Projects with sound planning and adequate funding will continue to succeed. The policy could separate well-prepared firms from those relying heavily on early IPOs for survival.

Conclusion: Reform With Responsibility

SEBON’s decision represents a major reform in Nepal’s IPO market. It introduces responsibility into the public fundraising process. Although the rule may delay some projects, it promises a stronger, more reliable capital market in the long run.

By enforcing this new policy, SEBON leads Nepal’s regulatory sector toward transparency, accountability, and investor protection. The change may be tough, but it could redefine trust in Nepal’s hydropower sector and the financial market as a whole.

For more: SEBON Mandates Power Generation