OPEC Fund Lends $15 Mn to Nepal to Finance MSMEs, Renewable Energy Projects

Vienna-headquartered the OPEC Fund for International Development (the OPEC Fund) has signed a USD 15 million loan in favor of NMB Bank in Nepal for the purpose of financing micro, small and medium-sized enterprises (MSMEs) and renewable energy projects.

This is the OPEC Fund’s first financial institution transaction in the country, and NMB is now Nepal’s 7th largest commercial bank in terms of asset size.

MSMEs currently constitute over one-third of NMB Bank’s total loan portfolio i.e. approx 4,800 borrowers and the bank has been working toward increasing its MSME base.

Besides, NMB has also been already one of the leading finance providers for local renewable energy providers in Nepal. Its renewable energy portfolio consists primarily of hydro projects i.e. over 90 per cent of its renewable energy portfolio and total committed limits for renewable energy stand at approx 17 per cent of its total loan outstanding book.

Commenting on the loan agreement, the OPEC Fund's Assistant Director-General, Private Sector and Trade Finance Operations, Tareq Alnassar, said “there is a significant gap between the MSME sector’s supply of finance and the demand for credit. 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.”

Alnassar further said “the OPEC Fund is excited to be working with NMB to support such integral sectors. 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.”

“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,” said Sunil KC, Chief Executive Officer of NMB Bank.

To date, the OPEC Fund has committed over USD 224 million to Nepal via public sector financing.