NMB Bank, one of the premier banks in Nepal with unique brand identify of sustainable and value-based banking has secured a first-of-its-kind $25 Million climate finance facility from British International Investment (BII), the UK's development finance institution and impact investor. 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.
This investment reasserts 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 deal, which follows the DFI's initial investment of $15 Million in 2018, represents the continuance of the enduring relationship between BII and NMB.
The investment from BII is in recognition of Nepal's immense hydropower potential along with NMB Bank's expertise and track record in successfully delivering on hydropower and renewable energy projects. Nepal has one of the highest per capita hydropower potentials in the world, with a total economically viable hydropower potential of approximately 43GW of which approximately only 2.3GW is in production.
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 600MW.
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."
