Allocation of shares to locals must be made mandatory for hydroprojects

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    KATHMANDU, Dec 13

    sharesConstruction of new hydropower projects can be affected if legal amendment were not made to make it mandatory to allocate shares for locals. There is no legal provision to guarantee shares of hydropower projects to the locals now but big projects are facing problems due to dispute about that.

    Stakeholders say the issue needs to be addressed after locals have started to obstruct projects demanding shares. The locals have started to demand shares in return for use of natural resources, and new projects are forced to give shares to the locals to ensure their ownership. There is no binding provision requiring promoters receiving generation license to issue shares to the locals and commoners now, and new projects are being constructed without making any arrangements to allocate shares to the locals and commoners.

    Progress of projects under construction and in preparation for construction looks set to be affected if they do not provide shares to the locals. The Securities Registration and Issue Regulation includes a provision requiring the hydropower companies issuing shares to the commoners to allocate at least 10 percent to the locals. The projects that do not wish to issue shares to commoners do not have any compulsion to allocate shares to the locals. Half a dozen projects with generation license have guaranteed shares for locals and commoners now.

    The locals have obstructed 45 MW Upper Bhotekoshi recently demanding shares against the agreement with government. Agreement for the project, that has been in operation for the past 14 years, does not mention share allocation for locals. The project has agreed to provide five percent of shares at the rate of Rs 100 each after the local’s movement. Similarly, locals have also demanded shares for 900 MW Arun III. There is little chance of Arun III also moving forward without providing shares to the locals.

    Energy entrepreneur Guru Prasad Neupane says obstruction of Upper Bhotekoshi demanding shares 14 years after completion of construction is against agreement. “It is positive that the locals ask for shares of projects to be constructed. But obstruction of Bhotekoshi demanding shares violating the agreement with government has sent a negative message internationally. Everybody must be careful about that,” he states. He advises for collection of investment from the locals before construction of the projects. “Upper Tamaksohi has done delay in issuing shares to locals. The project would have been required to pay less in interest had it issued shares to locals before construction of the project,” he opines. Citing example of his project Neupane adds, “There are 1,600 share-holders in the 25 MW Kaveli B that my company is developing. We are making additional investment arrangements by selling 10 percent shares to locals.”

    Upper Tamakoshi (Dolakha), Mid Bhotekoshi (Sindhupalchowk), Maikhola (Ilam), Rasuwagadi/Sanjen (Rasuwa/Nuwakot) have guaranteed 10 percent shares to those affected by the projects. All of these projects are also issuing shares for the public. Spokesperson at the Securities Board of Nepal (SEBON) Niraj Giri says there should be legal provision requiring the projects to be constructed to allocate shares for locals. Pointing that the Securities Registration and Issue Regulation does not require the projects not issuing public shares to allocate shares to locals, he adds, “It is about time for the body issuing license to think about that. The Electricity Act must include provision requiring share allocation for locals.”

    Pointing at the problems gradually being faced by the projects not issuing shares to commoners, he suggests that the Energy Ministry that issues license must address the issue. He argues that issuing shares to locals will give a sense of ownership to them ensuring that the projects do not face problems. Share analyst Rabindra Bhattarai also says there should be legal provision even for the projects that have not issued shares to commoners. “The problem has already been seen in Upper Bhotekoshi and Arun III that have not issued public shares. The government must keep a provision of issuing shares to the locals in the Electricity Act to address the problem,” he opines. He says obstruction of projects by locals will automatically end once the legal provision is made.

    Calling the demand for shares in return for use of natural resources in their area natural, he advises the state to address that. “This problem should be addressed by the Energy Ministry and not SEBON. The ministry must think whether the status of locals will be that of promoters or commoners while issuing shares to them,” he adds.

    Source : Karobar Daily