Kathmandu: More than two decades ago, National Hydropower became the first hydropower company to be listed on the Nepal Stock Exchange (NEPSE).
The company was listed on 2 July 2003, with the aim of energizing the capital market and bringing production-sector companies into the stock market.
Until then, only companies from other sectors were listed, but National Hydropower’s entry set a trend for hydropower listings. The project was approved with a provision that ownership would be transferred to the government after 50 years. At present, however, most hydropower projects in Nepal are structured to revert to government ownership after 30 or 35 years.
While granting National Hydropower permission to list, authorities at the time overlooked a critical question: what happens to the shares of investors once the project reverts to government ownership? Neither the regulators nor the government paid attention then, and even after 22 years, the issue remains legally unresolved.
Although National Hydropower has been listed for 22 years, it has been in commercial operation since 1999, with a license valid until 2047. According to this arrangement, the project will come under government ownership in about 23 years.
Despite the long listing period, regulators have shown little interest in clarifying what will happen to shareholders once projects are handed over to the government. Meanwhile, nearly 100 hydropower companies—most of them under the BOOT (Build-Own-Operate-Transfer) model—are already listed.
The majority of listed hydropower companies will be handed over to the government after 35 years. Currently, about 37 hydropower companies are also in the pipeline, awaiting IPO approval from the Securities Board of Nepal (SEBON). With so many BOOT-model companies listed, uncertainty over the fate of public share ownership has become a pressing issue.
“Hydropower companies were listed to bring productive enterprises into the capital market, but without clear policies, a large number of companies are now listed under BOOT arrangements,” said an analyst. “In the coming years, as these projects transfer to government ownership, today’s uncertainty could turn into a serious problem for investors.”
The analyst further noted that two decades of government inaction has left public and local investors’ share ownership in limbo. He stressed the need for urgent reforms to address ambiguities for both existing listed companies and those seeking to list in the future.
Recently, while amending the Securities Registration and Issuance Regulations, debate has arisen on this issue. As more hydropower companies are listed, concerns are mounting about what will happen to investor funds once projects revert to government control.
Though National Hydropower was the first to list, the first project to be handed over will be the 5 MW Mailung Khola Hydropower Project, which must be transferred to the government in 2037. Mailung Khola Hydropower Company Limited, which has 3.76 million listed shares on NEPSE, has not developed other projects, raising further questions about the fate of public shares once BOOT contracts expire.
“Based on current arrangements, many projects will soon be handed over to the government. But unless the fate of public and local investors’ shares is clarified, uncertainty will continue,” said an official. “If authorities keep stalling, resolving the issue later will be even harder.”
Except for projects directly owned by the Nepal Electricity Authority (NEA), nearly all hydropower projects in Nepal are built under BOOT models. The Electricity Act of 1992 allows licenses for generation, transmission, or distribution for up to 50 years. The Hydropower Development Policy of 2001 sets 35 years for domestic projects and 30 years for export-oriented projects, but it does not mention the fate of investors’ shares after handover.
Most private projects currently operate under 35-year licenses. The law mandates that companies with more than 51 percent foreign investment must be handed over to the government, while those promoted by Nepali investors may retain flexibility to continue operations.
Clause 10(4) of the Electricity Act states that after the expiration of a license, companies must reach an agreement with the government to continue under mutually agreed terms. However, there is no explicit provision regarding listed shares once projects are transferred.
As a result, investors remain in limbo. The root cause, many argue, is negligence from both the government and regulators for over two decades.
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Currently, SEBON is in the initial phase of revising the Securities Registration and Issuance Regulations to resolve issues like these. The High-Level Economic Reform Recommendation Commission has also pointed out the risk that investor capital could be trapped in BOOT-model companies once licenses expire, emphasizing the need for regulatory clarity.
Ganesh Karki, President of the Independent Power Producers’ Association of Nepal (IPPAN), argues that the Electricity Bill itself should clearly define what happens to public shares after projects are handed over. With many large-scale projects under development, he believes this issue must be resolved urgently.
“In the past, only a few companies were listed, and the problem was not so visible. But today, dozens are already listed, and many more are in line,” Karki said. “Soon, projects will start transferring to the government. Therefore, the time has come for clear policies.”
Karki warned that unless this issue is properly addressed, it could lead to serious challenges, as public investments in hydropower shares are substantial.
“The government is drafting a new Electricity Bill. It must include provisions to resolve these uncertainties. Options like extending projects under lease after 50 years should be considered,” he said. “Otherwise, in the future, citizens might take to the streets seeking returns on their investments.”
He further cautioned against policies that could harm the hydropower sector under the guise of BOOT models, adding that IPO-related provisions and the future of public shares after government takeover must be settled through the law.
Lately, calls have grown louder to clarify the fate of shares once BOOT-model projects—built for fixed terms such as 25 or 30 years—are handed over to the government. Many argue that BOOT-based companies should not be listed in the same way as ordinary public limited companies. With most listed hydropower companies falling under this model, experts warn that today’s uncertainty must be resolved before it grows into a major crisis.
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