The Millennium Challenge Corporation (MCC) Nepal Compact, a US-funded project for upgrading roads and construction of cross-border transmission line, has achieved expected milestones in its first year of implementation, stakeholders said during a news conference held on Wednesday to mark the completion of the first year of the project.

Khadga Bahadur Bisht, executive director of the Millennium Challenge Account (MCA) Nepal, announced that they have selected the contractor for the 18-km cross-border transmission line segment and the contract is set to be awarded by August 2024.

Bisht also mentioned that a new tender will be issued this year for the construction of a 297-kilometer transmission line. He added that the MCA-Nepal awarded and signed contracts worth approximately $126 million for the construction of three 400 KV GIS substations in Nawalparasi West, Nuwakot, and Tanahu between May and July 2024.

It was revealed that the New Damauli and Ratmate substations will each have a capacity of 1000 MVA, making them the largest in the country. Additionally, the MCA Nepal signed a $1.2 million contract on July 22, 2024 to provide advisory support on economic, financial, technical, legal, and policy/institutional regulatory matters to the Electricity Regulatory Commission. A further $2.4 million contract was signed on July 15, 2024, to provide consultancy services aimed at enhancing electricity use, focusing on preparing Municipal Energy Plans and developing capacities for productive electricity use within affected wards under the MCA Partnership Program, a benefit-sharing activity under the Electricity Transmission Project.

According to MCA Nepal, which is responsible for implementing the projects under the MCC, the Initial Environmental Examination (IEE) report for road maintenance on the 40-km segment from Dhan Khola to Lamahi on the East-West Highway has been approved. MCA-Nepal said they are planning to initiate the procurement of road maintenance works using Full Depth Reclamation (FDR) technology later this year.

The MCA Nepal successfully completed a two-year Livelihood Restoration Program with an investment of $1 million for 270 project-affected individuals in the Ratmate Substation area on May 30, 2024, paving the way for new businesses and prosperity.

The MCA Nepal said they have established compensation fixation committees in nine districts to determine land compensation, with compensation amounts already fixed in Dhading, Makawanpur, and Nawalparasi West. Forest census work has been completed in nine out of ten project-affected districts, and MCA-Nepal is now verifying data to apply for forest permits.

MCC Resident Country Director for Nepal, Diane Francisco, expressed optimism that the MCC project will be completed within the stipulated time and praised the Nepal government’s efforts to expedite the project.

US Ambassador to Nepal, Dean Thompson, also emphasized cooperation of all stakeholders in ensuring the project’s timely completion and appreciated the Nepal government’s support in this endeavor. He noted that the project is not only aimed at reducing poverty in Nepal but also at addressing various other challenges.

The initial agreement for the MCC project was signed between the Finance Ministry and the US government representatives on September 14, 2017.

However, the MCC was delayed due to widespread protest by a section of the society on the pretext that the grant agreement was allegedly a part of the Indo-Pacific Strategy of the US government.

After much debate and deliberations, the House of Representatives finally ratified the MCC grant agreement on February 27, 2022 with a 12-point explanatory note clarifying that the project should not be associated with any military alliance and that the grant agreement must abide by the Constitution of Nepal.

According to the initial agreement, the United States was supposed to provide US$ 500 million to Nepal for construction of cross-border transmission line and upgrading of roads while Nepal would have to contribute US$ 130 million for the project, expecting the total cost of the MCC project to remain at US$ 630 million.

But the 'supplemental agreement' over the MCC that was signed last year, demands the government to bear additional cost of US$ 67 million, seeking its total contribution of US$ 197 million for the enforcement of the agreement. In the beginning, Nepal was supposed to take up 20.63 per cent financial responsibility for the MCC project and now it has increased to 28.26 percent. The increased responsibility amount is equivalent to Rs 900 million.

(With inputs from RSS)