Sebon in wait-and-watch mode to approve IPO floating of Upper Tamakoshi due to allocation dispute

IPOHigh level source at Securities Board of Nepal (Sebon) has ruled out the possibility of approval of issuing initial public offering (IPO) of Upper Tamakoshi Hydropower Limited (UTKHPL) to the locals of the project hit area anytime soon.

According to a senior level officer at the Sebon, the capital market regulator will not give a go-ahead to the Upper Tamakoshi for floating the IPO to the locals at least before the Dashain/Tihar festival.

“Since the controversy has surrounded over the allocation of the shares to the staffs of the Employees Provident Fund (EPF) or commonly known as Karmachari Sanchaya Kosh, we are first waiting the cooling off of the heats,” the senior official told ShareSansar on the condition of anonymity, saying that he was not authorized to speak with the media on such a sensitive issue.

The staff unions of the Nepal Electricity Authority (NEA) are up in the arms against the higher portion of the share allocation to the staff of the EPF while locals of the Upper Tamakoshi project hit areas have also reported to be unhappy with the ‘unjustifiable’ allocation of the shares.

The senior official also said that various delegations were visiting the capital regulator’s office seeking regulatory body’s intervention for the ‘justifiable’ allocation of the primary shares. “Staff unions and other lobby group have been asking us to not give a go-ahead until the allocations disputes are settled,” the source said.

Narayan Prasad Ghimire, Financial Analyst of Citizen Investment Trust- which is the issue manager of the Upper Tamakoshi, said that they are on the process to float the IPOs.

“I do not think that issuing IPO has been delayed. It is in the process. Since Dashain and Tihar festivals are in round the corner, it would be difficult to manage the things of issuing IPO,” he said.

“Since the current allocation holds a long term importance and the locals also seem unhappy, we do not want to further aggravate the dispute by giving approval soon. Let’s see how things move ahead,” the source added.

When asked for the official comment, Niraj Giri, spokesperson of Sebon, said that the distribution and allocation was not the jurisdiction of the capital regulators.

“We do not bother what percent of the shares are allocated to whom.It is laid down in their own Memorandum of Articles (Prabandha Patra). But, we only make sure that such details are stated in the prospectus before IPO is approved,” he said.

He also told ShareSansar that they will give a go-ahead as soon as the process is completed. “We have sought the audited financial report and asked them to amend some details in the prospectus. As soon as they submit it, we will grant approval,” he added.

Dubbing the allocation of the shares of Upper Tamakoshi Hydropower Project to the staffs of the Kosh as ‘too high and unfair’, the staff unions of Nepal Electricity Authority have been long demanding the review of the share allocation.

They argue that nowhere in the world there is the practice of distributing shares to the staff of loan provider.

Political parties and the locals of the Dolkaha, where the project is being developed, are up in arms against the big portion of the share allocation to the staff of EPF, CIT and Rastriya Beema Sansthan.

Since there are just 500 staff with EPF, the principle financer of the project, each of the EPF staff will be getting 3,050 units or 15 lakh 24 thousand, nine hundred 60 units, which amounts to 1.44 percent of the total primary shares.

Source : ShareSansar