Nepal Seeks Fairer Climate Finance, Says Grants Must Prioritise Adaptation

In view of a huge chunk of the climate finance Nepal received is loan, the stakeholders have underscored the urgency of increasing grant-based climate finance to augment mitigation and adaptation efforts.

Speakers attending a discussion organized at the Nepal Pavilion under COP31 on ‘Access, Quality and Equity of Climate Finance in Nepal’ viewed that it is not fair for a developing country like Nepal, with negligible role on climate change, to bear the burden of additional debt to face the climate crises.

According to the data shared at the programme organized by the NGOs Federation Nepal and the Oxfam, Nepal has received US$ 5.71 billion in climate finance from various sources from 2011 to 2021.

Of the finance received from multilateral sources, 61 percent is in the form of loans, while 38 percent is in the form of grants and one percent is in the form of shares and equity.

Undersecretary at the Ministry of Finance, Arjun Dhakal, informed that while mobilizing climate finance, the selection of grants and loans is determined on the basis of the nature of the project, need, availability of financial resources, and the economic returns.

Grants should be given priority for adaptation for the vulnerable countries like Nepal.

Since most of the investments in adaptation do not provide direct economic returns, grants would be more appropriate than loans in such projects, according to him.

Concessional loans can be mobilized for renewable energy, hydropower and climate infrastructure where economic returns can be obtained.

In case of foreign loans, repayment period, grace period, ability to repay the loan and the overall sustainability of the loan are issues to consider, he added.

Neha Sharma from the Adaptation Fund viewed development of institutional capacity and fulfillment of necessary criteria are imperative to bolster direct access of national institutions to climate finance.

The criteria relating to gender equality, environmental and social safeguards, procurement process and financial management, the national implementing agency count for accessing direct finance from the International Climate Fund, according to her.

Director at the National Nature Conservation Fund, Dr. Manish Raj Pandey, shared Nepal’s experience in access to biodiversity and genetic resources and sharing of benefits.

Founding director of Satat Sampada Climate Foundation, Harjit Singh, said that climate finance should be provided not as a donation or aid but as a responsibility of developed countries that have major role to climate change and as a right of affected countries.

The discussion was attended by representatives of the NGO Federation’s President Arjun Bhattarai, as well as representatives of climate finance, government agencies and the conservation sector.