KATHMANDU: The Independent Power Producers’ Association, Nepal (IPPAN) has rejected a proposal by the Nepal Insurance Authority to form a new mechanism to address disputes over high premium rates, insisting that the authority must first implement the previously agreed de-tariff system.
The stance came during a meeting held Thursday at the authority’s central office in Kupandol, where IPPAN representatives, the Nepal Insurers’ Association, and reinsurance companies were invited to discuss ways to resolve the long-standing dispute.
Executive Director of the Insurance Authority, Sushil Dev Subedi, had proposed creating a new framework to address issues in energy sector insurance, but IPPAN leaders dismissed the plan, saying they would not participate in any such body unless the de-tariff agreement was enforced.
“First, the de-tariff system must be implemented. Only then can we discuss other mechanisms,” said IPPAN Senior Vice-President Mohan Kumar Dangi. “If the authority continues to delay enforcement despite prior agreement with insurers, our protests will intensify.”
IPPAN has been in dispute with the Insurance Authority since June 2021, when the regulator issued a directive setting a minimum premium rate for non-tariff insurance, increasing rates by up to 500 percent. Hydropower developers argue this has significantly increased project costs.
According to IPPAN Vice-President Uttam Bhlon Lama, the current premium rates mean that during construction, insurance costs amount to 1.5 percent of total project costs, and 6–8 percent of annual revenue after completion, among the highest insurance rates in the world for the sector.
Nepal Insurers’ Association President Birendra Baidwar Chhetri acknowledged that insurers are already in principle agreement with de-tariffing but noted that hydropower is considered a high-risk sector, which has led many international reinsurers, and even domestic reinsurers in some cases, to avoid coverage.
The Insurance Authority said it had postponed the creation of the proposed mechanism for now, and discussions on de-tariffing will continue. Subedi stated that the regulator is committed to improving insurance services for the hydropower sector, reducing costs, and developing a dedicated energy insurance policy.
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