In 2006, Clean Energy Development Bank (CEDB) was established as a development bank in Nepal. The bank was built from scratch guided by Mr Manoj Goyal (CEO), mainly with the purpose of financing companies active in renewable energy based power generation. The intent was to tap into the Nepali Hydro potential. As a country with the world's second greatest source of inland waters, containing as many as 6000 rivers, rivulets and tributaries, Nepal cannot meet its own electricity demands, and also cannot serve energy scarce neighbours like Bangladesh, India and China. The country's hydropower potential is estimated to be upwards of 50,000 MW - actual electricity generation from hydropower in Nepal is currently 800 MW from 20 major hydropower plants and a number of small and micro hydropower plants. In spite of this potential there exists a large supply/demand gap in the power markets and Nepal's 30 million people and most of South Asia's 1.7 billion people remain starved of electricity.
Since 2008 FMO has been a 14% shareholder, of which half of this ownership has been funded by Triodos Renewable Energy for Development Fund, a fund managed by Triodos Investment Management (“TIM”). CEDB became a listed a bank and turned profitable in 2009. It has since paid out dividends each year and is recognized as the best development bank in Nepal with a balance sheet total of USD 125m, of which 34% is exposed in renewable energy. CEDB is member of the internationally well-known “Global Alliance for Banking on Values” . FMO nominated Alwin Kool to CEDB’s Board of Directors and also had FMO’s Governance Unit provide advice on the bank’s—at times—pressing corporate governance issues.
In order to gain even greater access to the expected large hydropower potential of the country, CEDB needs to obtain a commercial A-bank status. As a development bank with a limited capital position, CEDB has been restricted in its activities and has not been able to syndicate large hydro projects. For that reason, a few years ago, CEDB started discussions to merge with another bank. After some years of preparation, in September 2015 the central bank of Nepal (Nepal Rastra Bank, “NRB”) has approved the merger of 5 financial institutions (NMB Bank Ltd, CEDB Ltd, Prudential Finance Company Ltd, Phatibhara Bikash Bank Ltd and Bhrikuti Development Bank Ltd). The new entity, NMB Bank Ltd, will have a Commercial Bank A-status. NMB is led by CEO Mr Upendra Poudyal and the Board of Directors is chaired by Mr Pawan Golyan. It will become a leading commercial bank in the country with focus on the clean energy development financing and with a better access to rural, agricultural Nepal. FMO (and TIM) will dilute in the new entity to 3.2% equity stake, however FMO has been invited by the other banks and NRB to become the largest shareholder with a 20% stake. FMO, in close partnership with TIM is proud to be part of the development from CEDB into this merged bank and anticipates its further support of the banking sector and renewable energy finance in Nepal by direct and indirect investments and loans.
About FMO
FMO is the Dutch development bank. FMO has invested in the private sector in developing countries and emerging markets for more than 45 years. Our mission is to empower entrepreneurs to build a better world. We invest in sectors where we believe our contribution can have the highest long-term impact: financial institutions, energy and agribusiness. Alongside partners, we invest in the infrastructure, manufacturing and services sectors. With an investment portfolio of EUR 8 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally. www.fmo.nl
Press contact:
Paul Hartogsveld
p.hartogsveld@fmo.nl
