IFC’s Nepal Environmental and Social Hydropower Program boosts sustainable industry growth

Kathmandu / June 14: The International Finance Corporation (IFC)’s Nepal Environmental and Social (E&S) Hydropower Program, spanning from 2016 to 2023, has successfully contributed to the expansion of Nepal’s hydropower sector and the development of a resilient industry.

The program has benefited a total of 67 hydropower projects, with a combined capacity of 3919 MW, including both operational projects and those in the pipeline. Moreover, the program aimed to train local experts in replicating global best practices, with the potential to influence an additional 17 projects generating an extra 2382 MW.

Nepal, with its hydroelectric potential of over 83,000 MW, is well-positioned to adopt a greener, more resilient, and inclusive development model. Additionally, the country can support its neighboring nations in achieving their climate goals by exporting surplus power.

Recognizing this opportunity, IFC collaborated with the Ministry of Forests and Environment in 2018 to develop a Hydropower Environmental Impact Assessment (EIA) Manual. The manual aimed to align Nepal with international policies and practices while incorporating innovative approaches in line with its climate objectives.

Ashish Garg, vice president of the Independent Power Producers’ Association, Nepal (IPPAN), acknowledged the significant impact of IFC’s efforts in promoting sustainable practices and fostering inclusivity within the industry. Garg expressed appreciation for IFC’s dedication to advancing environmental and social standards, emphasizing the positive contribution it will make to the overall growth and development of Nepal’s hydropower sector.

As part of the program, supported by the governments of Norway, Australia, and Japan, approximately 150 local officials received training to enhance their understanding of the EIA and monitoring process. These training sessions played a vital role in implementing the EIA Manual, which is now mandatory for all hydropower projects requiring an environmental impact assessment.

Maheshwor Dhakal, joint secretary of the Ministry of Forests and Environment, recognized the significance of the manual, stating that it aligns with the Environmental Protection Act of 2019 and introduces international best practices to Nepal’s hydropower sector.

In 2018, IFC also supported the development of the Environmental and Social Risk Management Guideline under the leadership of Nepal Rastra Bank. The guideline was updated in 2022 to include climate risks and sector-specific guidance for hydropower projects. It is now mandatory for all loan disbursements from commercial, development, and microfinance banking institutions.

To ensure effective implementation of the guideline, the National Banking Institute and IFC conducted two Training of Trainers programs. These programs equipped 45 trainers with the necessary knowledge to train 403 participants, ensuring that banks comply with standards addressing environmental and social risks associated with hydropower projects.