IPPAN Urges Hydropower Developers to Offer Shares at Par Value to Local Residents

The Independent Power Producers' Association, Nepal (IPPAN), a pivotal body representing the nation's private energy sector, has issued a significant appeal to hydropower project developers. IPPAN is advocating for local residents affected by these projects to be offered shares at their par value of NPR 100 per share, rather than at a premium. This call comes amidst growing discussions that some promoting companies are contemplating issuing shares to local communities at premium prices, a move that IPPAN believes could undermine the very purpose of such allocations.

In a recent press statement, IPPAN President Mohan Kumar Dangi emphasized that the Securities Registration and Issuance Regulations explicitly mandate the allocation of 10% of shares to local residents with the primary objective of benefiting them. He stressed that these shares should be made available at par value to truly fulfill this regulatory intent and foster genuine community participation.

IPPAN's rationale for this stance is deeply rooted in the realities of hydropower development. The association highlights that local communities bear significant burdens during the construction phase of these projects. They often provide crucial land resources, endure various environmental impacts, and face social disruptions. “The core objective of offering shares to locals is to involve them in the ownership of projects, acknowledging their direct support in making the project successful and the inconveniences they bear during the construction period,” the statement elaborated. IPPAN argues that if shares are issued at a premium, it would inevitably limit access for many local residents, thereby weakening their sense of ownership and commitment to the project's long-term success.

The association firmly believes that providing shares at an affordable par value strengthens the bond of trust between the project and the host community. This approach is expected to mitigate social disputes, facilitate smoother project implementation, and ensure timely completion. Furthermore, IPPAN posits that such a policy would significantly contribute to the economic empowerment of local populations and foster greater social harmony, creating a win-win situation for both developers and communities.

Beyond the immediate issue of local share pricing, IPPAN also voiced its concern over the protracted delays in the public issuance process for hydropower companies' ordinary shares, attributing these setbacks to regulatory complexities. The association noted that these delays have placed considerable strain on promoters, hindering their financial planning and project timelines. In response, IPPAN has urged the government and relevant regulatory bodies to streamline the share issuance process, making it simpler, more transparent, and time-bound to alleviate the challenges faced by developers.

In a proactive move, IPPAN has also called upon all its member companies to adopt a policy of offering shares at NPR 100 per share to local residents. This internal directive underscores the association's commitment to prioritizing local welfare and ensuring the long-term stability of hydropower projects across the nation.

The private sector currently accounts for over 80% of Nepal's total electricity production, making its role indispensable in the nation's energy landscape. IPPAN concludes that robust local partnership is not merely beneficial but absolutely essential for transforming the energy sector into a foundational pillar of Nepal's prosperity. This advocacy by IPPAN is a critical step towards ensuring equitable benefits from Nepal's burgeoning hydropower potential, balancing investor returns with community welfare, and fostering sustainable development in the energy sector. It underscores the need for a regulatory framework that supports both project viability and inclusive growth, ultimately strengthening the overall investment climate for hydropower in Nepal.