August 24: Energy producers and entrepreneurs have expressed their dissatisfaction towards the merger directives of the Electricity Regulatory Commission.   

The Electricity Regulatory Commission has issued a directive to the energy companies for the merge of private projects to enhance power generation, transmission, distribution, and customer service. However, energy entrepreneurs have said that such directive is not justifiable.

Private energy promoters say that the commission has not provided any concessions to encourage merger of companies and therefore the merger policy is not justifiable.

They allege that the commission issued such directive just to complete the administrative and legal processes. Last week, the commission had issued a directive allowing the promoters of private hydropower projects to merge, acquire, purchase and sale the share and transfer of ownership of the projects.

The entrepreneurs had demanded arrangements for royalty, income tax exemption, and license extension for production of the companies willing to merge. However, the entrepreneurs have expressed their dissatisfaction with the directive as the commission has not addressed these demands.

Nepal Rastra Bank has been providing various incentives to the banks and financial institutions that opt for merger. The power producers demand similar incentives from the commission for merger. The companies inform that merging two or more companies will only reduce their administrative expenses and there are no other benefits besides that.

Krishna Acharya, chairman of the Independent Power Producers Association of Nepal (IPPAN), informs that the promoters will not merge unless an incentive package is introduced.

“Companies from the same business house can merge. However, the directive does not encourage other companies to merge. It is practically difficult to merge hydropower projects. The merger is possible only if concessions are given,” he says.