How to Apply for Hydropower Local Shares & IPO in Nepal

Local shares (sthaniya sheyar) are a portion of a hydropower company's initial public offering (IPO) set aside exclusively for residents of the districts and wards affected by the project. Nepal introduced this benefit-sharing policy in 2008 so that communities bearing the environmental and social costs of a dam, tunnel or reservoir also receive a stake in its future profits. It is a uniquely Nepali provision: in most countries an IPO is open to everyone at once, but in Nepal a hydropower issue is split into reserved tranches, and the affected-area tranche opens before the general public can invest.

The legal basis spans several instruments. Hydropower benefit-sharing traces to the Hydropower Development Policy, 2058 (2001) and later practice under the Electricity Regulatory Commission framework, while the share issue itself is governed by the Securities Act, 2063 (2006) and the Securities Board of Nepal's (SEBON) Directive on Issuance and Allotment of Securities. Under long-standing SEBON practice, hydropower companies reserve up to 10 percent of issued capital for project-affected locals and a further quota for Nepalis in foreign employment, with the remainder for the general public.

For eligible residents this is one of the few chances to buy shares at face value (typically Rs 100 per unit) with a high probability of allotment, because the reserved pool is limited to a small population. That is why every hydropower IPO triggers a surge of 'how to apply local shares' searches in the affected districts. The trade-off is a lock-in: affected-area local shares generally cannot be sold for three years from the date of allotment, unlike general-public shares that trade once listed on NEPSE.

Eligibility for local shares is tied strictly to residence, not to nationality alone. Each company's IPO prospectus defines the project-affected area precisely, usually down to specific rural or urban municipalities and even individual ward numbers, based on the project's Environmental Impact Assessment (EIA). Only citizens who ordinarily reside in those named local units may apply under the local quota, and they must prove it, typically with a citizenship certificate and a recommendation or residence verification from the ward office or local government.

The affected area is often graded by intensity of impact, and the share allocation follows that grading. For example, in the Appolo Hydropower IPO the 470,000 local shares were split as 235,000 units for the highly affected Khijidemba Rural Municipality wards 7-8 of Okhaldhunga, 141,000 units for the moderately affected parts of Solukhumbu and Ramechhap, and 94,000 units for the lowly affected part of Ramechhap. This means two applicants in the same district can face different odds depending on which ward they live in, so it is essential to read the prospectus and the bank notice carefully.

A separate, parallel reservation exists for Nepalis working abroad. Under SEBON's Securities Issuance and Allotment (Sixth Amendment) Directive, 2022, public companies reserve 10 percent of the public issue for Nepali citizens in foreign employment who hold a valid labour permit (Shram Swikriti) from the Department of Foreign Employment and have remitted funds through formal channels into an eligible bank account. This tranche usually opens alongside the local one and before the general public phase, but it is a distinct category from the affected-area local shares.

The minimum application across Nepali IPOs, including the local-shares tranche, is 10 units, which at a Rs 100 face value means Rs 1,000 blocked in your bank account. Applying for exactly 10 units is a rational strategy for many investors because, in an oversubscribed lottery, allotment is designed to give as many applicants as possible the guaranteed minimum of 10 shares before any additional distribution happens.

The maximum you may apply for is set in each prospectus and capped by the size of the reserved tranche. In the Appolo example, local residents could apply for up to 47,000 units and foreign-employment applicants up to 94,000 units, matching their respective pools. Because the affected-area population is small relative to the reserved shares, the local tranche is frequently under-subscribed or only lightly oversubscribed, so eligible locals who apply for more than the minimum often receive much of what they applied for.

The application amount is blocked, not debited. Under ASBA (Applications Supported by Blocked Amount) and its centralised version C-ASBA, your bank freezes the application money in your own account until the result is published. If you are not allotted, the block is released automatically; if you are, only the value of the allotted shares is debited and the rest is unblocked. No brokerage or application fee is charged for applying to an IPO.

Before any hydropower IPO opens, you need the two accounts that make electronic application possible. First is a demat account, opened through a Depository Participant (usually a bank or broker), which issues you a 16-digit BOID that holds your shares in electronic form under CDS and Clearing Limited (CDSC). Second is C-ASBA registration at a bank, which links your bank account to the share system and produces a CRN (C-ASBA Registration Number). The CRN is the code you will select when applying, and it authorises the bank to block your application money.

You then create a Mero Share account, the online portal and mobile app operated by CDSC through which retail investors apply for and track IPOs. Registration typically involves filling the form on your bank/DP's Mero Share page, paying a small annual fee (around Rs 50, payable via eSewa, Khalti or connectIPS), and waiting one to two working days for the DP to approve and email your login credentials. Once logged in you set a transaction PIN, which you will use to confirm every application.

Residents of affected districts who have not yet opened these accounts should do so as soon as an IPO is announced, because approval takes time and the local window can be short. Nepalis abroad follow the same demat and Mero Share steps but must ensure their C-ASBA account is the qualifying foreign-employment remittance account, and they apply entirely online since collection centres are only within Nepal.

Most applicants apply online through Mero Share. After logging in, go to the My ASBA menu and open Apply for Issue (Current Issue). You will see the open hydropower issue listed with separate entries for the local/affected-area category, the foreign-employment category and, later, the general public. Choose the correct category for which you are eligible, enter the number of units (at least 10), select your bank account and CRN, enter your transaction PIN, and submit. You can edit or re-apply until the issue closes, and you should keep a screenshot of the confirmation.

For the affected-area tranche, companies also set up physical collection centres so that residents without smartphones or accounts can still take part. These are typically the project office itself and designated branches of the issue-managing bank and other banks in the affected and neighbouring districts, listed in the public notice. At a collection centre, staff help eligible locals complete the ASBA form against their bank account; you still need a demat account/BOID, so bring your citizenship, demat details and ward-office verification. Always confirm the exact centres and documents from the official notice, as they change with each issue.

Foreign-employment applicants apply only online through Mero Share (or a bank's smart-banking app that supports IPO) using their qualifying remittance account and CRN. Whichever channel you use, apply well before the deadline; systems are heavily loaded on the final day, and the local window may be extended by only a short grace period at the company's discretion.

If a tranche receives more valid applications than shares available, allotment is decided by a computerized lottery run by CDSC under SEBON supervision, so that money applied does not buy a better chance. Every valid application is given a unique identification number and the system first tries to give the guaranteed minimum of 10 units to as many applicants as possible. It divides the total shares by 10 to find how many applicants can be served, then works through the numbered applications using a calculated skip interval so that recipients are spread evenly and randomly across all applicants.

In practice this means applying for the minimum 10 units gives you essentially the same probability of getting those 10 shares as applying for thousands of units, because the first priority is breadth of allotment. Only where a tranche is lightly oversubscribed or under-subscribed will applicants who asked for more than 10 units receive additional blocks. The draw is conducted transparently with representatives of the issuing company, CDSC, NEPSE, the Office of the Company Registrar and the media able to witness the process.

After allotment, results are published on Mero Share (under My ASBA) and by the issue manager; allotted shares are credited to your demat account and the unblocked balance is released in your bank account. Because affected-area local shares carry a three-year lock-in, they will show in your demat holdings but cannot be sold on NEPSE until the lock-in expires. General-public shares, by contrast, become tradable once the company is listed.

The definitive source of eligible districts and wards is always the company's IPO prospectus and public offer notice, because the affected area is defined per project. SEBON publishes approved and pipeline IPOs on its website (sebon.gov.np), and ShareSansar, Investopaper and similar portals compile open issues with their local, foreign-employment and general phases. Hydropower has dominated recent listings: SEBON approved dozens of IPOs in the current fiscal year, many of them hydropower, and more than 40 hydropower companies sit in the approval pipeline.

Recent examples show how specific eligibility is. Kalinchowk Hydropower reserved 550,000 local units (10 percent, Rs 100 face value) for Dolakha residents in Bigu Rural Municipality ward 8 and Kalinchok Rural Municipality wards 1, 2 and 3, with ward 3 added after the EIA identified direct impact. Appolo Hydropower reserved 470,000 units for Okhaldhunga, Solukhumbu and Ramechhap. Solu Hydropower, developer of the 82 MW Lower Solu project, issued its local and foreign-employment shares to Solukhumbu-area residents in late 2025 before the general public phase.

Because issues open and close on a rolling basis, treat any list of 'currently eligible districts' as a snapshot. Before applying, confirm three things from the official notice: that your ward is named in the affected area, the open and close dates for the local tranche, and the designated banks and collection centres. When in doubt, verify against SEBON's site and the issue manager's notice rather than social media, since boundaries and dates are frequently updated.