nepal renewable energy
Image credit: Opec Fund

The NMB Bank Limited in Nepal is set to expand its lending for renewable energy projects after securing a $15 million boost from the OPEC Fund for International Development.

The Nepal bank will use the $15 million loan to expand its loan portfolio for small and medium-sized enterprises and renewable energy projects as part of efforts to end energy poverty and accelerate the energy transition in the country.

OPEC Fund’s assistant director-general of private sector and trade finance operations, Tareq Alnassar, said: “the current lack of access to reliable, grid‐supplied electricity and the reliance on power imports are constraining economic growth and poverty reduction in Nepal.

“This transaction – our first of this nature in Nepal – aligns with our support for the United Nations Sustainable Development Goals (SDGs) and with SDGs 1, 7 and 8 on ending poverty, providing affordable and clean energy, and supporting decent work and economic growth, in particular.” 

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The majority of NMB’s loan portfolio for renewables is directed towards hydro projects with the sector accounting for over 90% of the loans. Nepal relies on its hydro energy sector for grid reliability, however, with the majority of these projects using run-of-the-river water meaning fluctuations in electricity supply during the dry seasons, there is a need for the country to expand other renewables sources such as solar and wind.

Today, Nepal has an installed capacity of hydropower plants of 1,142MW and up to 83,000MW of hydropower potential. However, through the South Asia Sub-regional Economic Cooperation, Nepal is expected to continuously leverage funding from regional and international financing institutions to expand its solar and wind energy markets.

Despite power cuts of up to 10 hours Nepal residents have been facing over the past years, the country has greatly improved electrification programme especially in rural areas. According to the World Bank, Afghanistan, Nepal and Bhutan are the three countries with the greatest increases in national electricity access rates from 2006 to 2016.