MCA-Nepal Begins Construction of Strategic Power Transmission Project in Nawalparasi

The Millennium Challenge Account Nepal (MCA-Nepal) formally launched the construction of an 18-kilometre transmission line and the New Butwal Substation in Sunawal of Nawalparasi (Bardaghat Susta West) on Tuesday.

MCA Nepal said in a statement that the new infrastructure under the Millennium Challenge Corporation (MCC) Nepal Compact will strengthen Nepal’s electricity grid and establish a major energy trade interconnection between Nepal and India.

MCA Nepal added that the foundation stone was laid amid a ceremony attended by Finance Minister Rameshore Prasad Khanal, US Ambassador to Nepal Dean Thompson, MCC Resident Country Director Diane Franscisco, and MCA-Nepal Executive Director Khadga Bahadur Bisht.

Speaking at the event, Finance Minister Khanal said the project reflects the government’s commitment to expanding access to clean energy, boosting regional power trade and supporting long-term economic growth.

“With the support of MCC and MCA-Nepal, we are turning agreements into action for the benefit of the country,” the statement quoted Finance Minister Khanal as saying.

US Ambassador to Nepal Thompson said the United States is proud to partner with Nepal in building a more reliable energy system that will support households, businesses and regional trade.

“Projects like this transmission line and substation will not only help keep the lights on for families and businesses, but also create opportunities for trade, growth, and prosperity across the region. Today’s event is a testament to what we can achieve together,” said Thompson.

Executive Director Bisht said the transmission line and substation will strengthen Nepal’s energy security and create new opportunities for cross-border power trade, adding that MCA-Nepal remains committed to implementing the project in close coordination with the Government of Nepal and MCC.

According to MCA Nepal, the 18-km transmission line will connect the 400 kV New Butwal Substation to the Nepal–India border. The two projects together represent nearly USD 50 million in investment and are expected to facilitate the export of clean hydropower to India under the 2024 power trade agreement, which targets the export of 10,000 megawatts of electricity over the next decade.

Officials said the projects are vital to Nepal’s economic future as they will link the country’s expanding hydropower generation to regional markets, improve the reliability of electricity supply, reduce technical losses, and support private investment and revenue generation.

MCA-Nepal is the government entity responsible for implementing the MCC Nepal Compact, which comprises a total investment of USD 747 million—USD 550 million in U.S. grant funding and USD 197 million from the Government of Nepal—aimed at strengthening the electricity transmission network and reducing transport costs.