June 28: The government has started homework to extend the deadline of the Millennium Challenge Corporation (MCC) agreement which has become a matter of sharp polarisation in the country. Although the Millennium Challenge Account (MCA) Nepal and the government have agreed to start the project implementation (entry into force) from June 30, the government is preparing to extend the deadline as there is no favorable environment for immediate approval of the agreement by the parliament through national consensus.

Finance Minister Dr Yuvraj Khatiwada has held a discussion with MCC officials in Nepal regarding the extension of the deadline. According to a source at the Ministry of Finance, Dr Khatiwada initiated a series of discussion to extend the deadline as there is an acute polarization within the ruling Nepal Communist Party (NCP) over the MCC agreement, and it will not create favorable situation politically if the agreement is approved only on the basis of parliamentary majority.

The MoF source confirmed that last week Dr Khatiwada discussed the issue with US Ambassador to Nepal Randy Berry and MCC Resident Country Director for Nepal Troy Kofroth. The Finance Minister briefed the senior US officials including Kofroth about the disputes in Nepal over the MCC agreement. A senior official at the International Finance Assistance Coordination Division of MoF also said that there was no possibility of passing the MCC immediately, adding that the Minister had instructed to make necessary preparations to extend the deadline. “As soon as the deadline for the implementation of the project arrived, the minister has ordered to prepare all the documents to extend the deadline,” the source said.

The agreement needs to be approved by the parliament as a prerequisite for the implementation of the MCC project. “The project will not be implemented without the approval of the parliament.  The government of Nepal had said all the prerequisites will be fulfilled and will move into implementation before June 30. Therefore, a new date for entry into force should be fixed now,” a senior official of MCA told New Business Age.

The Millennium Challenge Compact agreement between Nepal Government and the United States of America was done on September 14, 2017. According to the agreement, the US will provide USD 500 Million grant to Nepal for the construction of power transmission lines and upgrading roads. The assistance under the agreement should be mobilized within five years from the date of implementation. In case of failure to do so, the remaining grant will be returned.

The government had said that the MCC agreement would be approved by the parliament from the last year’s convention. Hence, the MCC agreement was registered in the parliament in July 6, 2019. However, as the agreement could not be passed from the parliament at that time, the government had tried to sanction the agreement as soon as the next year’s budget was passed. But due to lack of consensus within NCP, the approval process has been delayed now. Besides, Speaker of the House of Representatives Agni Sapkota has already announced to postpone the budget session of the parliament till July 1.

Prime Minister KP Sharma Oli, in his address to the parliament, has been saying that he is in favor of presenting the MCC in the parliament and moving ahead only after a debate.

During a telephone conversation between Foreign Minister Pradip Gyawali and US Secretary of State Michael Pompeo last week, Pompeo expressed interest of the US administration regarding the parliamentary approval and implementation of the MCC agreement.