By: Nghiinomenwa Erastus
The Development Bank of Namibia has committed N$129 million under its climate funding facility to the development of two solar energy projects.
The bank head of marketing Jerome Mutumba updated The Villager last week.
The newly launched climate adaptation facility has been capitalised through a concessional loan of N$240m from the German KfW that DBN is on-lending to its clients.
So far, the bank has committed more than half of the climate adaptive facility’s available capital to two solar energy generating projects.
However, Mutumba highlighted that DBN, besides the provided concessional loan capital, the bank can also use its normal loan book to fund climate-friendly projects.
Access to energy is integral to the transition to an inclusive, just, sustainable, secure, and net-zero-emissions energy system in line with the Paris Climate Agreement.
Moreover, the country is facing energy supply risks, struggling to meet its domestic demand and relying on external supply.
This year, the country’s generation never surpassed 100 000 MWh, while its import shot up to more than 210 000 MWh.
The introduction of the facility also shows progress to accelerate climate adaptation projects.
Moreover, government negotiation for the concessional loan on behalf of DBN highlight commitment to decarbonise various production methods and how investments are directed in the country.
According to DBN’s response, the N$240 million loans are on concessional terms and allow them to fund the green type of project at a lower interest, depending on individual project risk outlay.
“On account of the concessional nature of the KfW funds, DBN can provide a lower interest rate to borrowers under this scheme,” said Mutumba.
He added that, as with all DBN’s loans, final pricing would depend on the inherent risk of the individual projects.
Mid this year, Namibia and Germany signed a N$1,8 billion loan agreement. A portion of this loan will be extended to DBN for climate-related infrastructural projects in the country.
Mutumba also indicated that during the bilateral talks between KfW and DBN, an additional Euro 30 million (around N$537 million at today’s exchange rate of 17.9286) credit line was discussed.
This credit line could be made available on the conclusion of satisfactory due diligence on DBN and the requisite signing of a loan agreement between DBN and KfW, and the provision of a GRN guarantee.
According to the UN secretary-general report (Access Energy) released in September 2021, unprecedented financial and analytical resources must be mobilised to build the enabling ecosystem.
The decentralised energy solutions and access to life-changing appliances should be included in energy planning and strategy development.
The UN secretary report also highlighted an urgent need for end-user subsidies to bridge the affordability gap in energy/electricity.
The report recommended support for enterprises with innovative, cost-effective, and scalable energy-access business models to enable the delivery of clean electricity solutions that can be accelerated to households, businesses, and community facilities.
Moreover, the report revealed that an energy revolution based on renewables and energy efficiency is urgently needed to accelerate economic progress and development and slash emissions that are rapidly warming our planet.
Today, the energy sector, dominated by fossil fuels, accounts for 73% of human-caused greenhouse gas emissions.
According to experts, global CO2 emissions must be halved by 2030 to avoid an increasing frequency and severity of unprecedented weather extremes, including heatwaves, floods, and droughts.
That poses risks to food and water security, population displacement, and loss of lives and livelihoods.
DBN has joined Bank Windhoek, which floated a green bond on the Namibian Stock Exchange, to fund green projects- with the last update exclusively, the portfolio was filled with renewable energy generation projects.
The bank highlighted that it would provide affordable and tailored financing solutions for climate and environmentally friendly projects.
The climate adaptation facility caters to projects that support, enhance, or correct environmentally friendly practices.
Thus, projects, especially in water, energy, heating/cooling, and related services in mitigating the effects of rising temperatures, can benefit from the facility.
The bank has previously financed low-carbon renewable energy generation, water reclamation for industrial use in Walvis Bay, water storage in Neckartal Dam, and reclamation initiatives. Email: erastus@thevillager.com.na
