The Solar Power Producers’ Association, Nepal (SOPAN) has expressed concern over the Nepal Electricity Authority’s (NEA) recent correspondence regarding the collection of investment from industrialists involved in the dedicated feeder and trunkline arrears dispute with hydropower companies.

SOPAN stated that the NEA’s letter contradicts the electricity sales agreement with power generation companies.

“It is against established principles of company law to transfer the liability of one company to another company with an independent existence, merely due to the presence of common shareholders,” the statement from SOPAN read.

The association emphasized that many energy companies have diverse shareholders, including the general public. Recovering arrears from unrelated industries through energy companies would severely impact shareholder rights. SOPAN further warned that such actions would negatively affect foreign investment and hinder the government’s target of achieving 10,000 MW of energy production within the next decade.

Nepal’s hydropower sector has significant foreign investment, and such decisions have reportedly frustrated foreign partners, raising concerns over a loss of transparency and credibility. SOPAN highlighted that this could weaken Nepal’s foreign investment environment and erode investor confidence.

“Since outstanding dues of unrelated industries or companies cannot be recovered from independently existing energy companies, we strongly request that no such actions be taken. Doing so would harm shareholder rights and undermine the potential growth of energy companies,” SOPAN concluded.

Source: Kantipur