Group 2

NMB Bank: From Waste to Energy – A sustainable blended financing project in Nepal


26 May 2023

NMB Bank was the first Nepalese commercial bank to join the Global Alliance for Banking on Values (GABV) in 2014. In 2021, the Banker Magazine awarded NMB Bank as the Bank of the Year in Nepal for the fourth time, and it was also recognised as Bank of the Year in Asia Pacific for its continued efforts towards sustainable and responsible banking. 

NMB Bank is successfully moving ahead in achieving its strategic ambition for 2025 to grow its financing towards the real economy above 50%. The bank has 100 sustainable projects in its portfolio that generate a minimum of 10,500 tons of carbon offset through financing 500MW Hydropower projects. NMB Bank is one of the few banks in Nepal that has adopted and is currently implementing the standards set by the International Finance Coalition (IFC) for Environmental Social Due Diligence, which defines NMB Bank’s responsibilities for managing their projects’ environmental and social risks.

NMB Bank is amongst the leading banks in Nepal in the sustainable financing space, including sectors such as Hydro Power, Renewable Energy, Agriculture, Education and Tourism sectors.

“NMB Bank aspires to become the most sustainable bank in the country by 2025, ” says CEO of NMB Bank Limited, Mr. Sunil KC.

Waste to Energy Project

The Waste to Energy project in a Sub-Metropolitan City in Ghorahi, Dang, Western Nepal, to manage municipal waste in the city is one of the many such projects being financed by NMB Bank. The project is developed by Nepal Urja Bikas Co. Pvt. Limited.

The growing number of urban populations led to increased municipal waste generation, creating a challenge in waste management. On the other hand, the increasing population also increased energy demand, which was catered to by the production of biogas and organic fertilisers.

NMB Bank chose to finance this project as it focused on waste management as well as renewable energy generation, and had a blended financing structure that shared the cost and risk involved, lowering the debt when compared to the size and cost of the project.

The Blended Finance Structure

The project cost $1.6 M and the blended finance structure was as follows:

World Bank (Through Government of Nepal)      :             USD 640K (40% Subsidy Capital)

Client Equity                                                                :            USD 480K

Bank Borrowing                                                          :            USD 480K

Local Government (Municipalities)                        :            Provide land for plant site and waste storage

The subsidy support from the World Bank and local Government made the project feasible. The project’s Capital expenditure burden for the plant, machinery, and land required for waste disposal and storage would have otherwise been too large.

The Competitive Advantage for Banking with NMB Bank

NMB Bank has excellent experience in renewable energy and waste management projects and has a reputation for sustainable financing. They are the handling bank for AEPC, the Nepal Government’s body managing subsidy funds for renewable energy-related activities. The project developer is an existing client of NMB Bank.

“There is a myth that when you finance a sustainable business, there is a higher risk, but our experience in the last 10 years is that we see that those assets are performing really well,” remarks CEO of NMB Bank Limited, Mr. Sunil KC. 

The Environmental, Social and Economic Impact of the Project

Organised waste management minimises the environmental impact it would have otherwise had. The distribution of CNG gas to households replaces kerosene and coal in many households. The CNG can also be used by three-wheelers as well, which further replaces the previous fossil fuel consumption. Organic fertiliser replaces chemical fertilizer. Lastly, the project produces import substitutions for petrol, LPG, Gas, Coal and chemical fertilizer, which in return helps save the country’s foreign exchange.

NMB Bank is thoughtful about the impact of Climate change and Global Warming. consequently, the bank has been advocating for clean green energy and climate financing. NMB Bank has a dedicated and strong renewable energy team under its Sustainable Banking vertical that continues to focus on building access to energy in remote and last mile areas of the country.   

Learn more on Banking on Values Day

Related content