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Kathmandu, Sept 23: Finance Minister Rameshwor Prasad Khanal said that even though there is a suggestion to allow hydropower companies to issue IPOs only after they start generating electricity, it cannot be stopped without a legal basis.

Speaking on Monday with officials from the Independent Power Producers’ Association of Nepal (IPPAN), he said the Securities Board was wrong to block hydropower company IPOs without a law. “There is a suggestion to issue IPOs only after power generation begins, but there is no law for that. Since the House of Representatives has been dissolved, a new law cannot be made, so companies should get IPO approval under existing laws,” he said.

IPPAN Chair Ganesh Karki said that the 28-month halt on IPOs had caused more than Rs 1 trillion in financial losses for promoters and the state. He urged immediate approval for public offerings worth over Rs 23 billion for nearly four dozen companies in the pipeline, and implementation of the rule allowing applications after 50% construction and approval after 65% completion.

IPPAN also demanded the removal of the “take-and-pay” provision from the budget, saying it had blocked contracts for projects under 10 MW and made power purchase agreements for 13,000 MW worth of projects uncertain. It asked the government to stop charging 28% customs duty on spare parts in violation of the Electricity Act (which sets it at 1%) and to instruct local governments to stop collecting extra taxes and share demands.

Karki also raised concerns that banks had started recalling loans taken against IPO shares and had stopped lending to projects that had yet to start power generation, causing construction delays.

Minister Khanal responded that until a new law is passed, IPO approvals and other facilities must be given based on existing laws, and assured that the government is committed to keeping power producers’ morale high.

People’s News Monitoring Service