IPPAN Urges Hydropower Developers to Maintain Face Value for Local Shares Amidst IPO Delays

The Independent Power Producers' Association, Nepal (IPPAN) has issued a strong appeal to all hydropower promoter companies, urging them to uphold the existing legal mandate of issuing shares to project-affected local communities at their face value of Rs. 100 per share. This directive comes amidst growing concerns within the sector regarding potential deviations from this established practice, primarily driven by prolonged delays in the initial public offering (IPO) approval process for several hydropower projects.

In a recent statement, IPPAN articulated its serious apprehension over discussions among some developers about pricing local shares at a premium. This consideration, according to IPPAN President Mohan Kumar Dangi, stems directly from the significant and often frustrating delays encountered in securing regulatory approvals for IPOs. While acknowledging the challenges faced by companies due to these holdups, the association firmly emphasized that any move to issue local shares above face value would fundamentally contradict the spirit and letter of Nepal's existing legal framework, thereby undermining the core objectives behind the allocation of shares to local stakeholders.

The Securities Registration and Issue Regulations, 2073 (2017), explicitly mandate hydropower companies to allocate 10 percent of their total issued shares to communities directly impacted by their projects. IPPAN's call to its member companies is a clear reaffirmation of this commitment, stressing the importance of maintaining the Rs. 100 face value for these specific allocations. The association underscored that hydropower development transcends mere financial investment; it represents a long-term developmental partnership built on mutual trust, cooperation, and a shared sense of ownership with local communities.

IPPAN highlighted that the provision for allocating shares to local residents was strategically introduced to acknowledge the invaluable contributions and sacrifices made by these communities. These include providing essential land for project construction, enduring environmental and social impacts, coping with construction-related inconveniences, and offering crucial support for the successful implementation and operation of hydropower projects. By offering shares at face value, local communities are empowered to become genuine stakeholders, fostering a deeper sense of ownership and significantly mitigating potential social disputes and project-related obstacles throughout the construction and operational phases. This approach, IPPAN believes, cultivates stronger local cooperation, facilitates timely project completion, and generates long-term economic benefits for residents through enhanced financial participation, localized development, and social harmony.

The association issued a stern warning that issuing local shares at a premium price would inevitably restrict the participation of affected communities, dilute their sense of ownership, and potentially erode the trust painstakingly built over years between project developers and local residents. Such a move could jeopardize the delicate balance required for sustainable hydropower development in Nepal.

Furthermore, IPPAN urged the Government of Nepal, relevant regulatory authorities, and all hydropower developers to prioritize the interests of project-affected communities. It called for ensuring the long-term sustainability of hydropower projects and preserving the healthy relationship between the private sector and local communities by steadfastly maintaining the policy of issuing local shares at the face value of Rs. 100 per share. The association also appealed to the government and regulatory agencies to streamline, enhance transparency, and expedite the regulatory processes associated with IPO approvals. It pointed out that delays in the share issuance process create substantial challenges for hydropower projects and called for the establishment of a more efficient and time-bound approval mechanism to ensure timely public offerings, which is critical for both project financing and investor confidence.