Nepal is rich in hydro-resources with one of the highest per capita hydropower potentials in the world. The first hydropower plant in Nepal was commissioned in 1911 AD. After 112 years of first hydropower plant, Nepal has entered into the era of energy surplus during the wet season months. It is encouraging to mention that Nepal Electricity Authority (NEA) has been exporting surplus energy to India which plays significant role in helping the nation increase foreign currency reserve. Besides, the government is promoting private sector participation in power generation to empower sustainable clean energy solutions.
NMB Bank Ltd. is committed to promoting clean energy solutions that contribute to a cleaner environment and sustainable future. We have been offering comprehensive financial solutions tailored to meet the unique need of hydropower projects of varying scales. We prioritize the projects that align with environmentally responsible practices and contribute to reducing carbon footprints and combating climate change. Similarly, our commitment to sustainable energy drives us to support projects that have positive impact on environment and local communities. Our successful track record in financing and supporting hydropower projects speaks to our expertise and commitment. Currently we have been financing over 50 hydropower projects, which are in various stages and is hence contributing the national agenda of “Ujyalo Nepal” (Lightened Nepal). Further, we are aligned to Nepal’s Nationally Determined Contribution of ensuring 15% of total energy demand being supplied from clean energy sources by 2030 AD.
In order to facilitate the prospective customers we have drafted basic checklist of documents that the developer/customer needs to submit at the Bank (Energy Sector Department, Head Office, Babarmahal, Kathmandu). These checklist which are basically associated with the developers’ requests at various stages of the Project developments. The standard lists may not be exhaustive and hence be project specific. This shall be well notified by the Bank during the course of the financing procedure.
Requirement One (Letter of Intent – LOI)
LOI is requested by the developer/customer as per the requirement of Nepal Electricity Authority (NEA)/Department of Electricity Development for the initial processing of; Connection Agreement and/or Power Purchase Agreement (PPA) and/or Generation License. The general validity of the LOI issued by the Bank is 1 year (from the date of issue) and the Bank shall charge standard fees (related to the size of the Project) which shall be duly notified.
The decision to finance the project shall be aligned with; satisfactory project review (satisfactory outcome of Due Diligence Report), adherence to the NRB’s policies and NMB Bank’s internal policies and approval from the Bank’s competent authority.
Checklist:
| SN | Description of Document (LOI) |
|---|
| 1 | LOI request letter (mentioning the purpose) |
| 2 | Maintenance of current account (non interest bearing) at NMB under the company’s name for settlement of LOI fee |
| 3 | Salient feature of the project/Executive Summary of the feasibility study |
| 4 | List/Name of the project promoters/Share Lagat |
Requirement Two (Performance/Bank Guarantee – BG)
| SN | Description of Document |
|---|
| 1 | Bank Guarantee request application (Bank’s standard form) |
| 2 | Project Company’s Board Minutes (with decision authorizing the company representative to execute relevant documents of Bank) |
| 3 | Feasibility Study Report |
| 4 | List/Name of the project promoters& Board of Directors (BoDs)/Share Lagat |
| 5 | Company Registration Certificate |
| 6 | PAN |
| 7 | MOA and AOA |
| 8 | Citizenship certificates of BODs, CV, KYC with net worth & brief profile of them along with 3 generation details; Board Structure |
| 9 | Survey License |
| 10 | Connection Agreement |
| 11 | Draft PPA/Energy Table |
| 12 | Brief Status of project development till date (equity injected, land acquired, access road, infrastructural development and others) |
| 13 | Total Project Cost/Cost breakdown details |
| 14 | Financial Projection of the Project |
| 15 | Guarantee format provided by NEA |
| 16 | Letter issued by NEA for submission of Bank Guarantee |
Requirement Three (Processing and Finalization of Project Loan)
Upon receiving the mandate from the developer/customer, the Bank shall proceed to arrange the required debt finance for the project as the Lead Arranger, Co-Lead Bank, Member Bank or Sole Financer. The procedure requires the Bank to thoroughly analyze the following documents:
Checklist:
| SN | Description of Document |
|---|
| 1 | Loan request letter (with proposed Debt/Equity Mix) |
| 2 | AGM minutes for the debt facilitation (including OD loan) |
| 3 | Feasibility Study Report (Entire Volume including the annexes with drawings) inclusive of Detailed Bill of Quantity (BoQ), unit rate estimation, project cost breakdown and investigation/ test reports (if any) |
| 4 | List/Name of the project promoters& Board of Directors (BoDs)/Share Lagat |
| 5 | Company Registration Certificate |
| 6 | PAN |
| 7 | MOA and AOA |
| 8 | Citizenship certificates of BODs, CV (with details on any past experience on hydropower project development), KYC with net worth & brief profile of them along with 3 generation details; Multiple Borrowing Declaration, Board Structure |
| 9 | Survey License |
| 10 | Connection Agreement |
| 11 | PPA |
| 12 | Brief Status of project development till date (equity injected, land acquired, access road, infrastructural development and others) |
| 13 | EIA/IEE (as applicable) – Environment study reports |
| 14 | Financial Projection of the Project |
| 15 | Tax Clearance Certificate-latest |
| 16 | Audited Financials of FY- latest (last 2 years if applicable) |
| 17 | Generation License |
| 18 | Transmission survey license |
| 19 | Management Structure of the Project Company |
| 20 | Details on past experience (hydropower project development) |
| 21 | Equity Injection Plan and brief information on the source |
| 22 | Document detailing construction methodology & planned contractual arrangement |
| 23 | Project Implementation/ Construction Plan and Schedule in line with commitments in the PPA |
The proposed developer shall arrange to submit entire set of above mentioned documents before the final approval of the debt.
We have been collaborating with stakeholders, industry experts and regulatory bodies to create an ecosystem that fosters successful hydropower project implementation.
Join us in creating a cleaner and more sustainable energy future!
For inquires or to get started on your hydropower project financing journey, please contact our Sustainable Banking Department.
