Share issuance halt impacts hydropower project construction in Nepal

KATHMANDU: The suspension of share issuance processes for more than 30 hydropower projects, including 27 applications for primary (IPO)/rights share issuance, has severely impacted the construction progress of these projects.

Since Ramesh Hamal assumed the role of Chairman of the Securities Board of Nepal, the share issuance process has come to a standstill due to the absence of a new chairman. Developers have voiced concerns over the prolonged delay in share issuance, stating that it has hindered the progress of project construction.

Despite 42 companies issuing IPOs in the last fiscal year, including 29 hydropower companies, no IPOs have been issued for hydropower companies apart from Lumbini Urja Company’s IPO on Bhadra 5 of the current fiscal year.

Presently, 18 hydropower production companies, including one solar company, have applied for IPO issuance, seeking permission to issue shares. However, only a fraction of these companies have submitted IPO applications due to uncertainties surrounding permission.

Ganesh Karki, Chairman of the Independent Power Producers’ Association Nepal (IPPAN), highlighted that the share issuance process, worth approximately 14/15 billion rupees, has been stalled for ten months.

Additionally, nine hydropower companies awaiting rights share issuance have faced similar challenges, with an estimated fundraising amount of around 7 billion rupees.

Previously, the Securities Board of Nepal (SEBON) had approved rights share issuance for hydropower companies in Poush.

However, the delay in obtaining permission for rights share issuance has led to adverse effects on hydropower development projects, impacting those in the IPO phase as well.

Balaram Khadka, Secretary-General of IPPAN, emphasized the detrimental impact of delayed approvals on hydropower projects, particularly when construction reaches 50 percent completion.

The lack of approvals from relevant authorities has posed significant obstacles to the timely completion of these projects, exacerbating concerns within the industry.