The fund, which will be extended through various microfinance institutions via the state-owned Alternative Energy Promotion Center, is expected to benefit 600,000 people through 2015 and lower incidence of energy poverty in the country.
“We believe the program will address the energy needs of the low-income groups as it will extend much-needed finance to end-users by creating an enabling policy environment and ensuring participation of supply chain players (like retailers and technicians),” Ana Klincic Andrews, chief technical advisor of UNCDF Nepal, told an interaction held in Kathmandu on Tuesday, where the $26-million global clean energy initiative called CleanStart was launched.[break]
The United Nations reckons that providing reliable and efficient clean energy to the low-income groups can help reduce carbon emissions, boost income generating activities and reduce household expenditure on costly and non-environmental friendly fossil fuels like kerosene and diesel.
“But lack of appropriate end-user finance schemes, rather than technology, has impeded reaching low-income market segments on a wide-scale,” says a report jointly published by the UNCDF and the UNDP - the two main financiers of the CleanStart project.
This has denied access of these vulnerable groups to clean, reliable and affordable energy services for cooking, heating, lighting, communications and other productive purposes.
This problem, according to the report, can be fixed by ensuring “appropriate financing arrangements, combined with targeted quality assurance of technologies being financed and technical advisory services.”
The UNCDF has said microfinance institutions can play a major role in bridging the financing gap as their core clients are low-income groups.
As per the CleanStart program, microfinance institutions interested in gaining access to this finance must first make a bid. “The technical details of the process are yet to be finalized,” Andrews told Republica on the sidelines of the interaction.
But once microfinance institutions are qualified they will be entitled to concessional loans, risk capital grants to cover the up-front cost of introducing a new product line and pre-investment technical assistance to develop business plans, says the report.
“Besides, microfinance institutions can also access a completely new revenue stream by selling carbon credits on the voluntary carbon market,” the report adds.
In the long-run, these efforts, according to the report, will lay the groundwork to dramatically scale up energy financing for the poor, without subsidies, paving the way for strengthened economies, protected ecosystems and enhanced equity.
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