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OPINION: How can Nepal finance climate action?


Dr. Divas B. Basnyat of Nepal Development Research Institute (NDRI (divas@ndri,org.np) writes on the challenges and opportunities for accessing climate finance in Nepal. This blog is based on the project “Support for Strengthening Climate Finance Activities in Nepal” funded by CDKN and implemented by NDRI in partnership with Prakiti Resource Center (PRC).

Nepal, party to the United Nations Framework Convention on Climate Change (UNFCCC), has committed to mainstream climate change into national and sectoral development policies, strategies and plans, and to pursue the path of low carbon development to achieve both the national goal of poverty eradication and sustainable development. While there are challenges pertaining to Nepal being one of the most climate vulnerable countries in the world, there are a full range of public and private financing mechanisms available for the country to tap into to support low carbon, climate resilient development.

One of the key barriers to accessing climate finance in Nepal is lack of understanding and awareness of the relevant government, non-governmental and private sector organizations on available international climate finance. In addition, there are divergent views and understanding among key stakeholders like the government ministries and departments, and the implementing agencies within the government and private sector.

Yet, there has been some headway on ground. Several small projects and programmes have been funded by a few dedicated multilateral climate funds such as Adaptation Fund (AF), Climate Investment Fund (CIF) and Least Developed Countries Fund (LDCF). Now, Nepal is preparing to access the Green Climate Fund (GCF). Ministry of Finance (MOF), the National Designated Authority (NDA) for GCF, is implementing a Readiness Programme with UNDP and UNEP, to help in strengthening the national capacities to effectively and efficiently plan for and, access, manage, deploy and monitor climate finance through the GCF. A nine-member coordination committee under the chairmanship of Secretary of MOF and a GCF section has been established. Two national entities, the Alternate Energy Promotion Center (AEPC) and the Nepal Trust for Nature Conservation (NTNC), have commenced the NIE accreditation process to gain a direct access to GCF for the country.

A training workshop on Capacity Assessment of potential National Implementing Entities (NIEs) was organized on 27 – 28 March 2017 as part of the project on “Support for Strengthening Climate Finance Activities in Nepal” funded by Climate & Development Knowledge Network (CDKN). The workshop focused on private sector organizations that could potentially access funds from GCF directly. Representatives of three national banks, Nepal Investment Bank Limited (NIBL), Vibor Society Development Bank (VSDB) and Bank of Kathmandu (BOK), attended the workshop.

Similarly, representatives from the government such as Ministry of Finance (MoF), Ministry of Energy (MoE), Ministry of Industry (MoI), Department of Electricity Development (DOED), Department of Road (DOR), Department of Irrigation (DOI), Department of Water Induced Disaster Management (DWIDM), Alternative Energy Promotion Center (AEPC).Nepal Electricity Authority (NEA) and Industrial Enterprise Development Institute (IEDI), and private sector bodies like Federation of Nepalese Chamber of Commerce and Industries (FNCCI) and Federation of Nepal Cottage and Small Industries also attended the workshop.

The workshop began with key presentations on different aspects of GCF delivered by Mr. Lal Bahadur Khatri, Under Secretary, MoF, opportunities for private sector illustrated by Mr. Rishi Raj Koirala, Joint Secretary, MoI and investment priorities from national climate change policies and strategies, showcased by Dr. Ram Prasad Lamsal, Joint Secretary, Ministry of Population and Environment (MOPE).. Dr Ram Prasad Dhital, Executive Director of AEPC, shared his organization’s experiences to date from the NIE accreditation process for GCF, helping participants to understand the requisites of the accreditation process, as well as the solutions for different challenges.

Ms Areej Riaz of CDKN shared regional experiences from Asia, Africa and South America, from which Nepal could benefit, while details on different aspects of accreditation and opportunities for Nepal were explained by the project team.

The second day of the workshop focused on assessing the suitability of private sector participants for accreditation to GCF. Using a self-assessment exercise, the participating organizations became aware of the basic and specialized fiduciary, and environmental and social safeguard standards they need to comply with. About half of the participants thought more procedures needed to be developed to fully meet the requirements, and half of the participants thought they meet GCF’s environmental and social safeguard (ESS), and gender policy requirements. It was recognized that most will need some restructuring and additional procedures to meet the ESS and Gender requirements.

Most of the participants shared they weren’t aware of climate funds like GCF and the workshop helped them in understanding the opportunities, processes and procedures of accreditation and access to climate funds. “The workshop was really helpful in understanding the basics of GCF and how it worked, moreover, the training session also cleared our view on recent climate change scenarios and what was being done globally for mitigation and adaptation, especially in developing countries” summed up the views of many. Another participant remarked that he “came to know about GCF for the first time in this training”, response of the participant from Department of Irrigation.

The participants made several suggestions on capacity development needs that they would like Ministry of Finance and others working on climate finance to support. These included, among others, support for NIE accreditation application, ESS and Gender compliance and hands-on trainings of Executing Entities (EEs) on screening, developing and implementing projects.

Trainings on developing bankable project proposals was a recurring recommendation.
While all the participants of the training workshop expressed their interest in accreditation to the GCF two national banks, two government departments and one private sector organization showed a firm interest to pursue accreditation as a NIE and requested the NDA to support them. Few others were interested in developing project proposals and executing projects through accredited NIEs in Nepal.

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