Nepal’s NMB Bank secures $25m clean energy funding from UK international investment

Nepal is one of the richest countries in the world in terms of inland water resources. Nepal has around 6,000 rivers, streams and tributaries along with other significant resources such as snow cover, springs, lakes and groundwater. The country has one of the highest hydropower potentials. Nepal’s technical hydropower potential is estimated to be around 83,000 MW. The economically viable potential is around 43,000 MW.

Nepal has overcome the worst load shedding days where consumers would experience up to 18 hours of load shedding per day. Currently, Nepal has a surplus of electricity during the rainy season and is now able to export electricity to neighboring countries, such as India. The country is able to export about 364 MW from various hydro projects through the Dhalkebar-Muzaffarpur 400 kV transmission line to the Indian Energy Exchange (IEX) daily market. Nepal’s current installed generation capacity is just over 2,100 MW.

To ensure year-round self-sufficiency, as well as earn substantial revenue from electricity exports, Nepal is striving to accelerate the utilization of its water resources. There are several hydropower projects in various stages of development under the Nepal Electricity Authority’s Engineering Services Directorate. These include Chainpur Seti HEP, Aandhi Khola Storage HEP and Begnas Rupa Pump Storage HEP. The Electricity Authority of Nepal has also signed a Memorandum of Understanding with Satluz Jal Vidyut Nigam (SJVN), India, for the joint development of Arun 4 HEP.

British International Investment (BII), the UK’s development finance institution and impact investor, is also working to help develop the country’s hydropower sector. Recently, NMB Bank, one of Nepal’s leading banks, secured a one-time $25 million climate finance facility from the BII. The loan facility is expected to support the development of the bank’s climate finance-eligible assets, thereby strengthening NMB Bank’s financing capacity for hydropower and other renewable energy projects. The investment confirms the bank’s commitment to exploring diverse and new sources of financing to finance its main areas of intervention which are the real economy sectors and renewable energy projects, including hydroelectric projects. The new deal follows BII’s initial investment of $15 million in 2018. NMB’s contribution to Nepal’s total hydropower generation is approximately 7%, and it is additionally involved in project financing. at different stages with a total production capacity of approximately 600 MW.

The BII announcement adds:

“The deal comes at a time when the power sector is struggling with a shortage of liquidity and funding sources. The investment is expected to enhance NMB’s ability to grow its renewables and hydropower portfolio. while contributing to the government’s long-term vision of independence from fossil fuels.The funding also marks another milestone in NMB Bank’s continued success in securing investment from foreign lenders to support the economy. real and renewable energy sectors.

“At an event for the signing of the agreement, CEO of NMB Bank, Sunil KC said, “This agreement with BII is particularly important in the current circumstances where we are facing a difficult period in terms of relates to loanable funds in the industry. We are privileged to partner with BII for the second time in an agreement that is the first of its kind in the industry to finance the hydropower and renewable energy sectors.

“Srini Nagarajan, Managing Director and Head of Asia at British International Investment, said: “I am delighted that BII’s renewed partnership with NMB Bank aligns strongly with our aim to scale up climate finance. BII’s capital will support the bank’s climate assets by generating up to 50MW of clean energy, helping to limit greenhouse gas emissions and improving productive, inclusive and sustainable economic opportunities for local communities .

“Nepal remains a priority market for BII, and we are proud to deploy our capital to support the country’s growth trajectory and net zero ambitions.”


 

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