I see no connection between projects of MCC and BRI

The government signed a compact agreement worth $500 million with the government of the United States of America in September 2017 to build transmission lines, substations and roads in Nepal. Though the agreement was signed a long time back, implementation of the pact will only start in June next year as there has been considerable delay by the Federal Parliament in ratifying it citing various concerns. Against this backdrop of projects often getting delayed in the country, Sujan Dhungana and Umesh Poudel of The Himalayan Times caught up with Executive Director of Millennium Challenge Account Nepal Khadga Bahadur Bisht to get details of the projects. Excerpts:

What is the current status of the MCC-backed projects in Nepal?

The programme consists of two projects. One is the Electricity Transmission Project, which focuses primarily on the construction of a 318-km-long 400 kVA double-circuit transmission line extending from Nuwakot to Butwal and also three large capacity substations. The other project is the Road Maintenance Project that primarily focuses on maintenance works on 300 km of strategic roads. The detailed design of the transmission line and substations is nearly complete. We have already received the draft design and expect to get the final design soon. Of the planned substations, one will be built to connect to the national grid while the remaining two will be hub substations. The biggest substation will be located in Ratmate of Nuwakot district for which the land acquisition process is underway. In fact, we need to acquire 400 ropanis of land for the three substations. Moreover, we are also conducting the environmental impact assessment, which we prefer to call the environmental and social impact assessment (ESIA). We plan to finalise the ESIA report by mid-October. Likewise, we are also working on the resettlement plan for people who will be affected by the project. For people affected by the right of way clause of the transmission line project, we also plan to resettle them in a safer place and build better quality homes for them if they want to. We are following procedures as per the MCC, MCA-Nepal and International Finance Corporation (IFC)’s performance standards in our projects. After the ESIA and other preparatory works are completed, we will call a global tender for the project. For the road maintenance project, we will follow the American full-depth-recovery technology. It will change the entire phenomena of the existing method of pitching the roads in Nepal.

Implementation of the projects is scheduled to start from June, however the ESIA and other preparatory works are still being conducted. Won’t this affect the implementation of the projects?

The Nepal and US governments had signed the compact agreement in 2017. At that time, both the governments had expected to complete all preparatory works within two years. But things got delayed due to the local elections and also the provincial and national elections. Moreover, it took another four months after the elections for a new government to be formed. As a result, we got delayed by 10 months. We were supposed to start the projects from September this year but since we were delayed by 10 months, the commencement date has been extended to June 30 next year. We have been given a clear deadline to complete all preparatory works on time so that we can start executing the projects by June 30.  If we are unable to start implementing the projects by the said date, then the budget that has been allotted under this project will have to be returned to the US Treasury. Hence, we have no option other than to meet the given deadline. However, we still face two major hurdles. The first is that the compact agreement has not yet been

ratified by the Federal Parliament and the second is Nepal still has to sign an agreement with the Indian government to build a cross-border transmission line from Butwal to Gorakhpur in India. We signed the project implementation agreement with the government of Nepal on Sunday. However, the agreement on the cross-border transmission line has been delayed due to the general elections in India.

Earlier, it was said the Parliament would ratify the agreement during the budget session, which was not the case. Will this not affect the project execution deadline?

The project execution deadline will not be affected as such unless there are some major developments in the interim period. I think our project could not find space during the budget session due to other priorities of the government. Members of the Parliament have corresponded with us about them not being able to study the details of the project due to the budget session. However, they have told us that it will be ratified during the winter session of the House. There have been talks going around that the government is deliberately delaying its ratification, which I cannot ascertain. I think the delay could also be because Prime Minister KP Sharma Oli has not been attending Parliament regularly due to health issues. We hope it is ratified sooner than later. We need to complete the projects within five years and I see no reason why we will not be able to achieve it.

The Chinese president will be visiting Nepal very soon. Is there any chance that the government is intentionally delaying the ratification of MCC projects and giving more priority to China’s Belt and Road Initiative projects?

We have only heard about this from the press. I don’t think that the government is intentionally delaying MCC projects. If you look at the details of the MCC projects, you will notice that they are just simple projects being implemented for a period of five years. However, BRI is a long-term vision that deals with reviving the earlier Silk Road. So, I see no connection between the two and I believe the government is not delaying MCC projects just because of BRI.

What is the recent development regarding construction of the high-voltage Butwal-Gorakhpur cross-border transmission line?

The agreement with India to build the second high-voltage cross-border transmission line will soon be signed. Both the governments have formed a Joint Steering Committee to look into the matter. The JSC meeting that was held in Pokhara on January 24 held discussions and created a base for the agreement. The main aim of this second high-voltage cross-border transmission line is to create a circuit so that if there is any problem in the Dhalkebar-Muzaffarpur transmission line, the second line will automatically be activated for the import and export of electricity from and to Nepal. In a recent meeting, Indian State Minister for Power, RK Singh, said that the Indian government was positive about the agreement. Earlier, Nepal had made a proposal whereby India would have to utilise the transmission line for a minimum of seven years but India wanted it to be for a minimum of 25 years. This was a major bone of contention. But

recently both governments have reached an understanding to take ownership of half the project each. The next JSC meeting to be held in Bangalore will finalise the agreement.

Projects usually face problems during implementation phase in Nepal due to various reasons. In this scenario, are you assured that the MCC-backed projects will be completed on schedule?

When compared to other projects, the planning part of the MCC-backed projects has taken quite a longer time. We will have completed all preparatory works before we start implementing the project in such a way that there will be no room for anybody to lodge any complaint, which usually is the cause of projects being delayed. Moreover, we have to complete the projects by June 29, 2025 (American calendar). Due to this strict deadline, I believe all stakeholders will do their best. Moreover, we do not have to follow the Public Procurement Act and there is no compulsion for us to award any contract to the lowest bidder. So, when we award the contracts, we will be looking at the technical capabilities and expertise of the bidders than the bid amount that they have submitted. This, I believe, will help us rope in the best bidders to complete the projects on schedule.