By Sunil KC
NMB Bank is at the forefront regarding investment in the hydropower sector. We have invested around Rs 19 billion in 46 hydel projects. Of the total projects, the bank is a lead investor of 29 while it is acting as an investor partner in the remaining 17.
Two years back, NMB Bank introduced the idea of an energy bond for the first time in Nepal. And, it has facilitated us to float the largest possible amount into the development of the hydropower sector.
The amount committed by us to invest in the sector is Rs 34 billion which represents 18 percent of the total investment of the bank.
The current volume of Nepali banks in the said sector is to the tune of Rs 322 billion. Of this figure, Rs 100 billion has been invested over just the last two years. Till date, the banks have invested a total of Rs 5 trillion in various sectors of the country. In 2030, their investment amount is expected to total Rs 10 trillion. This amount should be invested as per the prevalent rules of the Nepal Rastra Bank.
Even though the investment level in the hydropower sector is increasing, there is still a funding gap in the sector. The very gap is initially estimated at US $ 20 billion.
To help fill this gap, the NMB is making proactive efforts in collaboration with other banks. Despite the problem of liquidity crunch surfaced over the last years, we have been able to arrange capital from foreign countries to inject it into the sector.
Nepal has set a target to sell 10,000 MW of electricity to India in the next five years. Nepali banks can invest up to Rs 300 billion in a single hydel project. They can come together to significantly augment the production volume of power in the county to help meet the set target.
(The write-up is based on the speech presented by KC, who is CEO of NMB Bank as well as the president of the Nepal Bankers’ Association (NBA), during a program held today in the capital)
