Finance Minister Rameshore Prasad Khanal has stated that while it may be appropriate to allow hydropower companies to issue an IPO only after electricity production begins, it is not possible to stop IPOs without a legal basis.

While meeting a delegation from the Independent Power Producers’ Association, Nepal (IPPAN) on Monday, Minister Khanal said that companies that have already submitted IPO applications cannot be denied permission merely because no new law has been enacted.

During the meeting, IPPAN Chairman Ganesh Karki highlighted that the Securities Board of Nepal (SEBON) has blocked hydropower IPOs for the past 28 months, causing over Rs 10 billion in economic losses to promoters and the state. He urged that the public issuance of over Rs 23 billion from 40 pipeline companies be expedited and that hydropower firms should not require a minimum net worth to obtain IPO approval.

IPPAN also demanded that the Securities Board revoke its decision to reject IPO applications until production begins, instead allowing applications when 50 percent of construction is complete and granting IPO permission at 65 percent construction. The association emphasized that due to the high investment, shares should be issued to local residents and the public even during the construction phase.

The delegation further raised concerns over the “take-and-pay” provisions included in this Fiscal Year (FY)’s budget for run-of-river projects. Despite the former Prime Minister KP Sharma Oli’s objections, the provisions have not been removed, affecting PPAs for small projects under 10 MW and creating uncertainty for 13,000 MW of pipeline projects. IPPAN requested that the government facilitate PPA approval by removing the budgetary restrictions.

Additionally, while the Electricity Act allowed import of hydropower spare parts with only 1 percent customs duty, the government has imposed 28 percent duty in the past two years. IPPAN urged Minister Khanal to enforce the provisions of the Electricity Act for spare parts and stop local governments from imposing arbitrary taxes and share demands.

Minister Khanal responded that although he had suggested allowing IPOs only after production, no law exists to implement this. “Since the Parliament is dissolved, no new law or amendment can be enacted. Therefore, all companies must receive IPO permission under the existing law,” he said.

He further questioned why the Securities Board had blocked applications for projects under construction, reiterating that IPO permissions should be granted according to current law. Minister Khanal assured that, even without new legislation, the government will work to boost the morale of energy producers by following the existing legal framework.