Only a maximum of 20 percent of the total project cost can be spent on administrative and technical expenses.
What you should know
The funds received by Nepal from various climate funds will now have to be mobilized only through the formal system (national budget) of the Federal Ministry of Finance. This arrangement has been made to make international assistance received for climate change mitigation and adaptation more systematic and transparent.
The Ministry of Finance has issued the ‘Climate Finance Mobilization Procedure 2082’ for the first time. The procedure issued on Monday states that when mobilizing climate finance funds other than technical assistance from the Government of Nepal, provincial governments or local levels, they should be done through the national system.
‘For projects or specific activities of projects to be implemented by the Government of Nepal, provincial governments or local levels, the Ministry shall make a financial agreement with an internationally recognized body and disburse funds through the Federal Consolidated Fund,’ the procedure states. ‘However, if an internationally recognized body implements specific activities of a project or project as per the detailed project proposal, it may mobilize the required funds for that purpose itself.’
Ministry of Finance Spokesperson Tanka Prasad Pandey said that the government has prepared a new legal framework with the aim of making the mobilization of climate finance flowing from the Climate Fund in Nepal simple, systematic and effective. He said that the procedure has been made to implement projects on a priority basis by creating a project pipeline.
‘This procedure has been issued to make international aid received for climate change mitigation and adaptation more systematic and transparent,’ he said, ‘in which a clear roadmap has been set for the selection, mobilization and monitoring of foreign climate finance, while the amount received from climate funds will be mobilized through a formal system by the Ministry of Finance.’ He claims that with the implementation of the procedure, Nepal’s claims for climate finance in the international forum and the mobilization of the aid received will be more credible and result-oriented.
The procedure has prioritized three main areas for climate finance mobilization. These should be related to addressing climate-induced losses and damages, adaptation programs in areas and geographies that are highly affected by climate change, and greenhouse gas emission reduction.
Geographical balance, job creation and the benefiting population will be the main basis while selecting projects. In order to focus resources on project work, the procedure also stipulates a maximum limit of 20 percent of the total cost of the project to be spent on administrative and technical assistance. Similarly, the recognized body for project implementation must ensure the sustainability of the project by establishing the ownership and ownership of the local community. For the mobilization of climate finance at the provincial or local level, the working procedure states that projects should be formulated and implemented in accordance with the responsibilities of the federal, provincial and local levels as mentioned in the constitution.
‘If it is found that projects and national climate-related programs falling within the jurisdiction of the federal government would be more effective if implemented at the provincial or local level, then if there is only one local level, the local level concerned, and if there is more than one local level, the provincial level should be given priority for implementation from the relevant level by providing conditional grants,’ the working procedure states, ‘When mobilizing climate finance in the national climate-related program operated by the Government of Nepal, the amount should be provided as conditional grants from the level from which the program is most effective when operated.’
The working procedure also provides for the mobilization of climate finance in private sector projects. According to which, there is a provision that the private sector projects can be implemented using the funds allocated by the Climate Fund only for the private sector or with the participation of the private sector. Similarly, there is a provision in the working procedure that the ministry should recommend private sector projects so that the Government of Nepal does not have financial obligations in the future and does not have a sovereign guarantee. The Ministry of Finance is going to prepare a priority list of projects. The Ministry will prepare a list of projects to mobilize climate finance using the nationally allocated funds periodically or when requested by the Climate Fund. After this, the necessary method has been decided to establish access to the Climate Fund. According to which, the recognized body or implementing body can send the concept paper of the project on the priority list to the relevant Climate Fund as per the requirement or send it to the Ministry of Finance for approval. The Ministry of Finance has been designated as the contact point for the mobilization of climate finance. The Ministry will operate a digital platform to maintain an integrated description of all climate finance activities. This platform will include project details, budget, donor agencies and progress reports. The Ministry has the right to have the project performance audited by a third party if necessary. A 17-member 'Climate Finance Steering Committee' has been formed under the coordination of the Finance Secretary to implement the
procedure. Similarly, a 'Technical Committee' will be established under the coordination of the Joint Secretary of the Ministry of Finance to evaluate and recommend technical projects. The 'Climate Finance Unit' under the Ministry's International Economic Relations Division will act as the secretariat for both these committees.
Nearly 58 billion received through the Climate Fund
Nepal has so far received 407.1 million US dollars (nearly 58 billion rupees) of assistance from various climate funds to mitigate the impact of climate change. 49 projects are under operation from the amount received by Nepal from various climate funds so far.
Nepal has been receiving financial assistance from bilateral assistance, the Green Climate Fund (GCF) established by multilateral development banks, and the United Nations Framework Convention on Climate Change (UNFCCC) to mitigate the impact of climate change. Nepal has so far received $407.1 million from the GCF, $148.3 million from the Global Environment Facility (GEF), $103 million from the Adaptation Fund, $9.5 million from the Climate Investment Fund, and $153 million from the Climate Investment Fund, according to the Ministry of Finance.
According to the Ministry of Finance, $121.12 billion is required to mitigate the impact of climate change on Nepal. Of this amount, the government plans to raise $12.32 billion from internal sources and $108.83 billion from external sources. So far, the amount received by Nepal under this heading is less than one percent of the total required amount.
Nepal is also not immune to the impact of climate change worldwide. It is said that Nepal's role in greenhouse gas emissions is negligible, but the impact of climate change is significant. Experts say that the increase in global temperatures due to climate change has had a greater impact on Nepal's mountainous regions. Due to this, changes in rainfall, drought and desertification, reduction in agricultural production and food security and energy production, health problems, and increased infrastructure construction costs have had an impact.
Various efforts have been made worldwide to address climate change. According to which, the United Nations Framework Convention on Climate Change (1992), the Kyoto Protocol (1997) and the Paris Agreement 2015 (which states that the global temperature should not increase to 2 degrees and should be kept to 1.5 degrees) have been made. Every year, the Conference of the Parties (COP) is held. In which it has been committed to increasing the amount of climate finance to 300 billion dollars annually by 2035. Funds such as the Green Climate Fund, the Global Environment Facility, and the Adaptation Fund have been established for climate finance.
