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Nepal’s NMB Bank Secures $25M Clean Energy Funding From British International Investment

Nepal is one of the richest countries in the world in terms of inland water resources. Nepal has about 6000 rivers, rivulets, and tributaries, and also has other significant resources such as snow cover, springs, lakes, and groundwater. The country has some of the highest for potential for hydropower. Nepal’s technical hydropower potential is reported to be around 83,000 MW. The economically viable potential is about 43,000 MW. 

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

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

British International Investment (BII), the United Kingdom’s development finance institution and impact investor, is also working to help to grow the country’s hydropower sector. Recently, NMB Bank, one of the premier banks in Nepal, has secured a first-of-its-kind $25 million climate finance facility from BII. The loan facility is expected to support the development of the bank’s climate finance eligible assets, boosting NMB bank’s financing capacity for hydropower and other renewable energy projects. The investment confirms the bank’s commitment to explore diverse and novel fund sources for financing its primary focus areas of real economy sectors and renewable energy projects, including hydropower projects. The new deal follows BII’s initial investment of $15 million in 2018. NMB’s contribution towards Nepal’s total hydropower production stands at approximately 7%, and it is further involved in the financing of projects in various stages with a total production capacity of approximately 600 MW.

BII’s announcement adds:

“The deal comes at a time when the power industry is grappling with shortage of liquidity and funding sources. The investment is expected to boost NMB’s capacity to grow its renewable energy and hydropower portfolio while assisting in the government’s long-term vision of independence from fossil fuels. This funding also marks another milestone in NMB Bank’s continued success in securing investment from foreign lenders to bolster real economy and renewable energy sectors.

“In an event organized for signing the deal, CEO of NMB Bank Sunil KC said, – “This deal with BII is especially important in current circumstances when we are facing a challenging time with respect to loanable funds in the industry. We are privileged to partner with BII for a second time in a deal which is first of its kind in the industry aimed towards financing Hydropower and renewable energy sectors.”

“Srini Nagarajan, Managing Director and Head of Asia at British International Investment, commented, “I am excited that BII’s renewed partnership with NMB Bank strongly aligns with our objective to increase 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 enhancing 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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Remeredzai Joseph Kuhudzai has been fascinated with batteries since he was in primary school. As part of his High School Physics class he had to choose an elective course. He picked the renewable energy course and he has been hooked ever since. At university he continued to explore materials with applications in the energy space and ending up doing a PhD involving the study of radiation damage in High Temperature Gas Cooled Nuclear Reactors. He has since transitioned to work in the Solar and Storage industry and his love for batteries has driven him to obsess about electric vehicles.

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