Halt in IPOs for 18 months due to undue PAC directives: IPPAN

KATHMANDU, FEBRUARY 17: The Independent Power Producers Association of Nepal (IPPAN) has raised concerns with the Nepali Congress parliamentary party about the suspension of Initial Public Offerings (IPOs) for the past 18 months due to what it claims are improper directives from the Public Accounts Committee (PAC).

On Monday, IPPAN representatives met with Shyam Kumar Ghimire, the Chief Whip of the Nepali Congress and a member of the Public Accounts Committee, to discuss the issue. They informed him that the committee’s directive to the Nepal Securities Board (SEBON) exceeded its jurisdiction, leading to the suspension of IPOs for 42 companies and rights shares for over 30 companies, collectively blocking public issuance worth more than NPR 50 billion.

IPPAN President Ganesh Karki argued that the directive hindered capital flow into hydropower projects, impacting not only the energy sector but also related industries such as cement and steel. This, he noted, has contributed to a slowdown in the overall economy.

IPPAN Deputy General Secretary Prakash Dulal criticized the directive for requiring companies to have a “90% real net worth” to issue IPOs, a term he argued is not recognized in any global accounting standard.

Out of 42 companies that applied to SEBON, all but four have a net worth above 90%. Why are the others not allowed to issue shares? he questioned.

During the meeting, IPPAN also raised concerns about the Supreme Court’s order halting infrastructure development in protected areas and issues related to the proposed Electricity Bill.

President Karki argued that the Supreme Court’s reversal of reforms made through ordinances has set the country back by 52 years. He warned that the proposed Electricity Bill seeks to reduce the license period for hydropower projects from 50 years to 35 years.

With investments from 6.5 million citizens already in place, changing the law to require projects to be handed over to the government after 35 years would discourage future investments and cause significant financial losses to the public, he said.

IPPAN urged that the bill clearly state that projects licensed under the Electricity Act of 1992 should continue to operate under the same terms.

Chief Whip Ghimire assured that he would raise these issues in Parliament. He criticized the socialist mindset of labelling profit-making businesses as corrupt, arguing that such attitudes have hindered Nepal’s economic progress.

The country is suffering because of the socialist slogan. The state runs on taxes, and taxes come from profits. If businesses are not allowed to make profits, there won’t be any tax revenue, Ghimire remarked.

He emphasized the need for a business-friendly environment, suggesting that the government should focus on regulation and facilitation while allowing the private sector to operate freely.