KATHMANDU, Feb 20: The Electricity Regulatory Commission (ERC) has stepped up actions against a number of hydropower companies whose promoters were found to be selling more than five percent of the shares without taking permission from the regulator.
According to the ERC, it has taken action against six hydropower companies in the first seven months of the current fiscal year for breaching the rules set by the regulator. “In addition, a notable number of developers are likely to face the regulator’s action,” said Ram Prasad Dhital, chairperson of the ERC. “We have issued public notices on this issue to facilitate providing adequate information to the companies concerned.”
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The ERC Rules 2018 has directed any company or institution licensed to carry out functions related to electricity generation, transmission, distribution or trade shall obtain prior approval of the Commission to issue shares publicly or to purchase/sell shares which constitutes change for the share structure between five percent and 50 percent. If the share transfers of more than 50 percent are needed to be carried out, the developer companies need to follow the ERC’s separate directive of the merger and acquisitions.
However, no prior approval is required if the hydropower companies concerned are listed on the Nepal Stock Exchange. The prior approval of the regulator is also needed when the companies look for issuing right shares for under construction power plants. Dhital said this rule is designed to maintain oversight and control over the ownership structure of hydropower companies, preventing sudden changes that might impact the electricity market.
According to the ERC, a number of hydropower companies are found increasingly carrying out their share trading before taking them for financial closure. Such malpractices are being seen due to the government rule that the hydropower companies are subjected to fall under the 35-year threshold after they receive generation licenses.
