The Nepal Weekly 
August 12, 2025Nepal Government Ministry of Finance (MoF) has released a comprehensive draft of the Climate Finance Mobilisation Procedure 2025. The document has been considered as a signalling a major policy push to access and manage international climate finance more efficiently.
The draft of the proposed procedure outlines a structured and transparent mechanism to prioritise, implement, and monitor climate-related projects both in public and private sector – across all three tiers of government as well as the private and non-governmental sectors.
With climate change posing an increasing threat to Nepal’s ecology and economy, the draft has accorded priority to compensation for loss and damage, climate adaptation, greenhouse gas emission reduction, and carbon trading.
The ministry has introduced a policy to allow the private sector to operate foreign climate funds (climate finance), setting various conditions. The Ministry of Finance has released the draft of the ‘Climate Finance Mobilization Procedure 2082’ for stakeholders’ opinions and suggestions on 7 August. It proposes the following: “The ministry will provide necessary facilitation for the mobilization of climate finance received by the private sector,” the draft states.
However, it has been proposed that the private sector must comply with specified conditions while mobilizing such funds. Private sector projects will have to be submitted to the Ministry of Finance for approval by a recognized body. The Ministry of Finance will have to seek the opinion of the relevant thematic ministry on the project proposal. The ministry can then give approval to it.
It has been proposed that the private sector will only be allowed to bring in funds other than the country allocation allocated to Nepal by the Climate Fund. “The draft states that the private sector should be allowed to participate in projects in addition to the country allocation allocated to Nepal by the Climate Fund, and that the private sector should implement the projects only with the amount allocated for the private sector,” the draft states.
Similarly, it is also stated that the government will not be a sovereign guarantor of loans taken by the private sector. “When recommending a project, the Government of Nepal will have to specify that it will not incur financial liability in the future,” the draft states. It has also been proposed that if it is proven that the funds were spent elsewhere, the Ministry of Finance may write to the relevant climate finance partner to freeze the funds and recommend regulatory action.
“The accredited body should formulate clear criteria for selecting projects received from private entities, evaluate the projects based on that, and recommend the projects that receive the highest scores to the ministry along with the evaluation details,” the draft states. It has been also proposed that private organizations will not be allowed to spend climate finance received for projects other than the project’s objectives and activities. The draft further states, “The ministry, line ministries, regulatory bodies and accredited entities shall regularly monitor the mobilization of climate finance. It shall be the responsibility of the concerned private entity to provide necessary information during such monitoring and to comply with the instructions given.”
Similarly, it has been proposed that private organizations will not be allowed to spend climate finance received for projects other than the project’s objectives and activities. It has also been proposed that if it is proven that the expenditure has been spent elsewhere, the Ministry of Finance may write to the relevant climate finance partner to freeze the amount and recommend regulatory action. The private organizations should regularly audit the project and submit reports to the ministry. The draft further states, “The ministry, line ministries, regulatory bodies and accredited entities shall regularly monitor the mobilization of climate finance. It shall be the responsibility of the concerned private entity to provide necessary information during such monitoring and to comply with the instructions given.
Likewise, the draft also states that the accredited body should conduct a mid-term and final evaluation of the project and submit a report to the ministry.
In the recently years, climate change has been a trade-off. It has had a negative impact. Nepal does not seem to have done much to prevent climate change. However, its negative impact is high in Nepal. From abnormal snowmelt to floods and landslides, there have been incidents in Nepal. Recently, efforts have been made globally to stop climate change. In the process, some climate funds have also been established in the world.
The Ministry of Finance has identified four main areas for mobilizing climate finance. The first priority will be to address damage and loss. It proposes to allow the private sector to operate the climate fund, with certain conditions. Similarly, non-governmental organizations will also be able to mobilize such grants. Similarly, it is said that climate finance can also be mobilized in government projects.
The draft working procedure mentions that climate finance will be mobilized for climate adaptation, emission reduction, and carbon trading. Similarly, the procedure states that such projects should be consistent with other government policies, plans, and programmes. It has been stated that the project should be aligned with the Constitution of Nepal, prevailing Nepalese laws, commitments made by the Government of Nepal at the international level, foreign aid mobilization policy, national adaptation plan, provincial and local level adaptation plans, nationally determined contributions related to climate change, and contributions to the Sustainable Development Goals. Similarly, it is stated that there should be alignment with the sectoral policies, periodic programs, and priorities of the Government of Nepal, provincial governments, and local levels.
