The majority of Nepal’s industrial sector’s energy demand is met through imported fossil fuels, which drain the country’s foreign exchange reserves. Nepal’s opportunities for economic growth are significantly reduced by this dependence on imported fuels and the rise of international fuel prices. In addition, energy intensity in the industrial sector remains high due to outdated technology and inefficient resource use amongst the 3.500 manufacturing companies, which are mostly small and medium-sized enterprises. In spite of the potential for investment into energy efficiency, few measures have been implemented in Nepal to date.
For this reason, KfW Development Bank has been funding pilot projects in various industrial sectors in Nepal and providing grants for the implementation of energy efficiency measures. KfW has established a grant fund of 2 million Euros, which was disbursed to eligible companies through its partner bank Rastriya Banijya Bank Limited (RBBL). The funding programme was directed at private companies in the manufacturing industry, particularly those in energy intensive subsectors, such as steel and cement manufacturing. Businesses from the most energy intensive service sectors, such as the hotel industry, were also eligible for funding.
In cooperation with INTEGRATION environment & energy, adelphi assisted RBBL in Nepal to implement and manage the grant fund. This assistance included processing the disposition fund, defining the criteria for choosing the measures to be subsidised, overseeing the programme’s orderly execution, and developing and utilising environmental and social standards such as capacity building and market development measures.