Government Introduces New Climate Finance Guidelines for Private Sector Projects

The government has introduced a policy framework for mobilizing climate finance in private sector projects. The Ministry of Finance has issued the "Climate Finance Mobilization Guidelines, 2022," which allows the private sector to access financial resources through international grants and concessional loans for green technologies, renewable energy, and climate adaptation projects.

According to the new guidelines, the private sector can implement projects using funds allocated from the climate fund or resources that the private sector can contribute. This framework aims to ensure active participation from the private sector in addressing the impacts of climate change. Public announcements will be made for project selection, ensuring that all interested private sector entities have equal opportunities.

Private Sector Project Selection Process

A Director's Committee, led by the Secretary of the Ministry of Finance, along with a technical committee from the International Economic Relations Division, will evaluate and guide the project selection process. The guidelines specify that a maximum of 20% of the grant amount can be used for administrative expenses. Additionally, the guidelines prohibit the application of technical assistance from multiple entities in a single project.

A private sector project is defined as one in which more than 50% of the total cost is financed by the private sector.

Transparency and Prioritization in Climate Finance

The guidelines also set priorities for how the climate fund should be spent. According to these priorities, funds will be allocated to areas such as climate adaptation, greenhouse gas emission reduction, and carbon trading. The assessment of projects will be based on their impact, sustainability, regional and geographical balance, employment generation, and environmental returns.

Furthermore, a digital platform has been established under the guidelines to track the progress and status of projects, ensuring transparency. This system will help maximize the effectiveness and transparency of the climate finance mobilization process.

New Opportunities for the Private Sector

The new guidelines open up new opportunities for the private sector to participate in climate solutions. According to officials from the Ministry of Finance, this is the first time clear provisions for climate finance mobilization in private sector projects have been introduced. This move is expected to simplify, streamline, and make climate finance mobilization more transparent in Nepal.

The government believes that this step will encourage significant participation from the private sector and help strengthen sustainable and green development to tackle the impacts of climate change.