KATHMANDU: The future of Nepal’s hydropower industry is hanging in the balance as the Securities Board of Nepal (SEBON) has delayed approval of Initial Public Offerings (IPOs) for 44 hydropower companies for nearly two years.
As a result, capital worth nearly Rs 19.88 billion, earmarked for energy development, remains locked and out of reach for project developers.
The companies, waiting to float shares to the general public, have been caught in a cycle of indecision for 22 months, despite repeated appeals to the regulatory body. While IPOs in other sectors were greenlit during this period, not a single hydropower IPO has received the go-ahead from SEBON in the Nepali calendar year 2081 BS.
The bottleneck has had ripple effects across the energy sector, with stakeholders warning that nearly 88 hydropower projects are now directly or indirectly affected. The inability to raise capital through IPOs has also hindered access to bank financing, increased project costs, and delayed construction timelines—undermining Nepal’s national energy goals.
Ganesh Karki, Chairperson of the Independent Power Producers Association of Nepal (IPPAN), expressed frustration over what he calls the government’s inaction despite public commitments to promote hydropower development.
“The government talks about hydropower-led growth, yet the very mechanism to raise investment—IPOs—has been blocked for 22 months,” said Karki. “Many companies took loans from banks based on the expectation that their IPOs would be approved within six months. That hasn’t happened, and now the cost of the projects has skyrocketed.”
According to Karki, banks are withholding further loans, citing mismatched debt-equity ratios, while developers are unable to inject more capital without IPO approval. “Energy entrepreneurs are now stranded in the middle,” he added. “We are stuck between financial institutions and a government that refuses to decide.”
Karki also criticized the Public Accounts Committee for allegedly misunderstanding the nature of hydropower financing. “The policy that IPOs should only be issued after project completion is destroying the entire sector,” he said, urging SEBON to resist such directives and act in the broader national interest.
Stalled projects
Mohan Kumar Dangi, Senior Vice President of IPPAN, echoed Karki’s concerns, adding that the stalemate has impacted not just the 44 companies in question but an additional 44 projects in the pipeline. “No funds have been mobilized for construction, and in some cases, second-phase projects are stuck,” said Dangi. “This 22-month deadlock has cast a shadow over the sector.”
He highlighted that the government’s own energy targets would remain unmet unless capital flow is ensured. “The government sets ambitious goals, but then blocks the very channels needed to meet them. If SEBON is not going to act, we might as well say it’s not a government body at all,” he added.
Dangi further explained that banks are now reluctant to lend because the typical financing structure—30% equity from developers, 30% from public IPOs, and 10% from local investments—has been disrupted. Without the public portion, debt-equity ratios are skewed, making financial institutions hesitant to release funds.
Frustration among investors
Balram Khatiwada, General Secretary of IPPAN, highlighted how even retail investors are losing confidence. “Around 6.5 million individuals have invested in hydropower. Now that IPOs are stuck, they’ve stopped investing,” he said. “This isn’t just a problem for entrepreneurs—it affects the entire ecosystem.”
Khatiwada also criticized SEBON for failing to provide clarity. “We’ve been repeatedly told, ‘It will happen soon.’ First, it was delayed due to the lack of a chairperson. Now that the chairman is in office, nothing has moved forward. We’ve even raised the issue with ministers and the Prime Minister,” he said.
Only three out of the 44 companies currently waiting have a net worth per share below Rs 90—yet SEBON has not allowed even the others with stronger financials to proceed. “If nothing else, SEBON should have allowed the viable ones to go ahead,” he argued. “At this point, we don’t even know who is making the decisions.”
SEBON denies blocking IPOs
Responding to the criticism, SEBON spokesperson Niranjay Ghimire refuted the allegations that the board has deliberately blocked hydropower IPOs. “We are reviewing all the submitted documents. The IPOs have not been stopped, but the files require updating,” said Ghimire.
According to him, SEBON has not targeted any sector and will issue approvals once companies meet compliance standards. “We’re simply making sure the documentation is complete. Once that’s done, IPO permissions will follow,” he assured.
However, the pace of the process remains a concern for stakeholders. Many argue that the lengthy review procedures are indistinguishable from a de facto moratorium, especially when companies have already waited close to two years.
Energy leaders are now urging SEBON to immediately resume IPO approvals—at least for companies that meet the current financial threshold. They argue that continued delays could stall not only individual projects but Nepal’s broader ambitions to become an electricity-exporting nation.
“Hydropower is a strategic sector,” said Karki. “If we let bureaucracy and indecision derail it, we’re not just hurting investors—we’re undermining national development.”
As the deadlock continues, both developers and investors wait for SEBON’s next move—one that could either revitalize a cornerstone of Nepal’s energy future or leave it mired in uncertainty.
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