While construction on the Indian section of the 400 kV Butwal-Gorakhpur cross-border transmission line is advancing swiftly, progress on the Nepali side has ground to a halt, government officials say.
Nearly two years ago, Nepal and India signed a long-term energy agreement, allowing Nepal to export up to 10,000 MW of electricity to India over a decade. Achieving this goal hinges on the development of robust cross-border transmission infrastructure. At present, the Dhalkebar–Muzaffarpur 400 kV line is the only operational transmission link between the two countries, capable of handling up to 1,000 MW of power.
The stalled progress on Nepal’s section of the Butwal-Gorakhpur line is primarily due to uncertainty surrounding the future of American aid. The 18-kilometre stretch in Nepal, funded by the Millennium Challenge Corporation (MCC)—a US foreign aid agency—is currently in limbo as doubts mount over the continuation of MCC’s support.
According to international media reports, MCC leadership has informed staff that the agency may be shut down following a decision by US President Donald Trump’s administration. Although the US government has yet to make an official announcement, foreign aid programmes were suspended for 90 days shortly after Trump returned to office.
“Most of the preparatory work—such as customs clearance for importing tower materials, tower design, land acquisition, and environmental assessments—has already been completed. But just as we were about to begin construction, the project came to a standstill,” said Rajan Dhakal, spokesperson for the Nepal Electricity Authority (NEA).
On August 30, 2023, the MCC’s local implementing agency, Millennium Challenge Account-Nepal (MCA-Nepal), signed a contract with a construction company to carry out the Nepali segment of the project. The contract stipulated that the work be completed within 21 months.
MCA-Nepal was established specifically to implement the MCC Compact, which includes the development of a 315-kilometre, 400 kV transmission line across Nepal and the upgrade of select segments of the East-West Highway.
In contrast, the Indian side of the project is progressing at pace. The 98-kilometre stretch is being built under a joint venture between the Nepal Electricity Authority and India’s Power Grid Corporation.
Read: Trump Administration Reportedly Preparing to Shut Down MCC: International Media
“About 60% of the Indian section has been completed,” said Rupesh Kumar Shah, coordination officer for the joint venture company, Butwal-Gorakhpur Cross-Border Power Transmission Ltd., based in India. “We’ve already finished constructing 230 towers, and stringing has begun in several locations. Foundation work for towers is 90 percent complete.” According to Shah, the Indian side aims to finish construction by May 2026, but at the current pace, completion could come even earlier.
The foundation stone for the project was jointly laid in June 2023 by then Nepali Prime Minister Pushpa Kamal Dahal and Indian Prime Minister Narendra Modi during Dahal’s official visit to India. Construction on the Indian side began a few months later.
The total cost of the Butwal-Gorakhpur transmission line is estimated at Rs 6.4 billion. Of this, Rs 1.28 billion (20%) will come from equity investment, with Nepal responsible for contributing Rs 640 million. Once completed, the line will enable the transmission of up to 2,000 MW of electricity from western Nepal.
NEA expects the country’s electricity generation to reach 10,000 MW within the next five years—further underlining the importance of timely completion of this critical cross-border infrastructure.
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