Alternative Energy Promotion Centre

Nepals Micro Hydro Debt Fund at a GlanceSurya K. SapkotaAssistant Director, AEPC &

Manu Binod AryalCredit Officer, NRREP/AEPC

07 February 20131

Alternative Energy Promotion Centre

Outline Background Objective of MHDF General Features Targets Funds Flow

Status of MHDF Lessons Learned

Q&A2

Alternative Energy Promotion Centre

Background High commercial rate for MHPs Mismatch between banks fund and long term loan

Security of loan and project High administration cost No accessibility of the MHP communities to

financial services3

Alternative Energy Promotion Centre

Objective of the MHDF To improve the access to energy of the rural population

by providing credit for rural micro hydro projects. The fund will demonstrate that lending to the rural micro

hydro sector can be profitable and managed by interested financial institutions as a commercially sustainable business

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Alternative Energy Promotion Centre

GIZ/EnDEV (German/Deutsch collaboration), NORAD has alsojoined

General Features

Euro 500,000 fund for soft loan to MHPs Additional 42,000 Euro (TA) for capacity building of local institutions, AEPC and rural communities Selection of two banks (CEDBL, HBL)

Additional Euro 600,000 fund (+ 50,000 Euro for TA) available Up to 40% debt financing possible Pure project financing approach5

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General Features..

Banks pay nominal interest (3.5 -5%) to AEPC,quarterly

Risk sharing is 50/50 between the fund and the banks

Maximum 12% permissible while lending The fund itself is in the form of a deposit Field trips sponsorships, capacity building possible Support to Projects from 10-100kW6

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Major Targets

416 kW of additionally generated electricity 3,500 households benefit19,000 individuals benefit

6,500 people in social infrastructure 600 people benefitting from productive end uses

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Fund Flow ModalityGIZ/ Germany

GoN

AEPC REF-CREF BANK 2 LFIs

BANK 1 LFIs

ESAP II/RERL

NRREP

MHPs

MHPs8

Alternative Energy Promotion Centre

Status of MHDF Two banks selected (CEDBL/HBL) Euro 150,000 disbursed equally

Around Euro 284,000 (Rs. 32.67 M) approved (14 MHPs) Around 270,000 (Rs. 31.10 M) under assessment (12projects)

About 7,000 HH will benefit

Over 75 end use activities will benefit9

Alternative Energy Promotion Centre

Lessons Learned Public land as a collateral is a problem Time taken for assessment is the deterrent factor

for the banks More training and capacity building needed Fulfilling documentary requirement by MHPUC is lengthy Hence, assessment by banks is lengthy More banks need to be inducted10

Alternative Energy Promotion Centre

Thank Youfor Your Kind AttentionFor More information: www.aepc.gov.np

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