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- The OPEC Fund boosts renewable energy and access to finance in Nepal
The OPEC Fund boosts renewable energy and access to finance in Nepal
May 10, 2021: The OPEC Fund for International Development (the OPEC Fund) has signed a US$15 million loan in favor of NMB Bank Limited in Nepal for the purpose of financing micro-, small- and medium-sized enterprises (MSMEs) and renewable energy projects. The loan represents the OPEC Fund’s first financial institution transaction in the country.
MSMEs currently constitute more than one-third of NMB Bank’s total loan portfolio (approximately 4,800 borrowers) and the bank is working toward increasing its MSME base. NMB is also already one of the leading finance providers for local renewable energy providers in Nepal. Its renewable energy portfolio consists primarily of hydro projects (over 90 percent of its renewable energy portfolio) and total committed limits for renewable energy stand at approximately 17 percent of its total loan outstanding book.
“There is a significant gap between the MSME sector’s supply of finance and the demand for credit,” says the OPEC Fund’s Assistant Director-General, Private Sector and Trade Finance Operations Tareq Alnassar. “Also, 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.
“The OPEC Fund is excited to be working with NMB to support such integral sectors,” continued Alnassar. “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.”
Sunil KC, Chief Executive Officer of NMB Bank, said: “The financing from the OPEC Fund will allow us to support the real economy in Nepal by strengthening employment and renewable energy generation, for which Nepal has tremendous potential. In turn, this makes us less reliant on imports and helps us become more self-sufficient and sustainable.
“Our belief in ‘banking on values’ means NMB does business in a way that makes us accountable to society and more focused on developmental impact,” KC continued. “This is in line with the OPEC Fund’s values and this common approach defines our partnership.”
NMB Bank was established in 1996 as a merchant bank and in 2008 expanded into commercial banking. In 2015, it underwent a merger with four other financial institutions to create its current form as a universal bank. NMB is now Nepal’s 7th largest commercial bank in terms of asset size.
The OPEC Fund has supported development in Nepal since the organization’s inception in 1976. To date, the OPEC Fund has committed more than US$224 million to the country via public sector financing.
About the OPEC Fund
The OPEC Fund for International Development (the OPEC Fund) is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively. The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world. The OPEC Fund was established by the member countries of OPEC in 1976 with a distinct purpose: to drive development, strengthen communities and empower people. Our work is people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment (particularly relating to MSMEs), clean water and sanitation, healthcare and education. To date, the OPEC Fund has committed more than US$22 billion to development projects in over 125 countries with an estimated total project cost of US$187 billion. Our vision is a world where sustainable development is a reality for all.