The Independent Power Producers' Association, Nepal (IPPAN) has urged the government to remove the provision requiring hydropower projects to show at least 20 percent financial progress before issuing rights shares for project construction. The association argues that the rule has created major obstacles in raising capital and advancing new projects.

On Tuesday, an IPPAN delegation led by Senior Vice President Mohan Kumar Dangi submitted a memorandum to Energy Ministry Secretary Chiranjivi Chataut and Electricity Regulatory Commission Chairperson Ram Prasad Dhital. The delegation stated that the existing provision has made investment management and project development increasingly difficult.

According to IPPAN, the current regulation requires companies to demonstrate 20 percent financial progress in proposed projects before they can issue rights shares to raise equity. However, the association says this requirement is impractical, as achieving such progress without first mobilizing capital is nearly impossible.

The provision is included in the “Guidelines on Prior Approval and Regulation of Public Issuance of Electricity-Related Shares, 2078,” issued by the regulatory commission. Under this rule, companies must submit documents proving financial progress, including loan agreements, before issuing rights shares. IPPAN argues that this creates a circular problem, as banks are reluctant to provide loans without adequate equity, while equity cannot be raised without meeting the progress threshold.

In its memorandum, IPPAN noted that developers already invest heavily in feasibility studies, licensing, detailed project reports, power purchase agreements, and financial arrangements during the early stages. Despite this significant upfront investment, they are still unable to meet the 20 percent benchmark, which delays project financing and construction.

The association has also demanded that companies be allowed to issue rights shares based on decisions made by their general meetings, especially for dedicated projects. Since only existing shareholders are eligible to participate in such offerings, IPPAN believes the risk remains limited and manageable.

IPPAN further stated that removing the provision would help create a more favorable investment environment and support the government’s target of generating 28,500 megawatts of electricity by 2035. According to the association, easing capital-raising procedures would encourage private sector participation and accelerate hydropower development.

Senior Vice President Dangi said that managing equity without issuing rights shares is almost impossible for most developers. He explained that banks and financial institutions do not provide loans unless sufficient equity is in place. “Without equity, there is no loan, and without a loan, projects cannot move forward,” he said, adding that the current rule has become a major barrier to construction.

Receiving the memorandum, Secretary Chataut assured the delegation that the ministry would initiate efforts to address the issue. Similarly, Chairperson Dhital said the commission would hold detailed discussions on the challenges created by the provision and work toward a practical solution.

The meeting was attended by IPPAN executive members including Uttarkumar Shrestha, Kubermani Nepal, Sushan Karmacharya, Suman Joshi, Shankar Basyal, and Chief Executive Officer Bhim Gautam.

Overall, IPPAN’s demand is being viewed as a significant move toward improving financial flexibility in the hydropower sector. If the provision is revised, developers expect easier access to capital, faster project implementation, and stronger private-sector involvement in Nepal’s energy development.