MCC projects expected to start from Sept 2019

MCC will provide assistance worth $500m under compact programme

Kathmandu, September 24

Two critical projects going to be executed under compact programme of Millennium Challenge Corporation (MCC) of US government are expected to kick off from September 2019.

Caroline T Nguyen, managing director - Europe, Asia, Pacific and Latin America of MCC, has urged the government to complete the preparatory works to start executing the projects from next year. “We expect the government to complete the preparatory works by next year so that the projects can be started. We are taking time to complete the groundwork for the project execution because the five-year timeframe will start ticking once we begin implementing the projects,” she said.

The grant assistance worth $500 million under the compact programme will be mobilised for execution of two crucial projects in energy and road (transportation), namely, electricity transmission project (ETP) and road maintenance project (RMP). The projects must be executed within five years, if not MCC will withdraw the assistance.

Before beginning the project execution, the Parliament must ratify the compact agreement signed between Nepal government and MCC in September 2017. The government must also complete the right of way clearance, land acquisition, resettlement, and environmental impact assessment, among others. Most importantly, government of Nepal has to conclude the negotiations to develop the cross-border transmission line in the western region with the government of India to pave the way for regional electricity trade.

“The MCC can assist in facilitating the negotiation by providing facts and database to develop a model that is economically viable for both countries to conclude the negotiation,” said Nguyen. MCC will provide assistance in a neutral manner and in fact, we can act as a bilateral negotiator,

she added.

The governments of Nepal and India have already started negotiations to develop a new Butwal-Gorakhpur cross-border transmission line, however, the issues of capacity booking, wheeling charge and financing in the projects are yet to be settled.

Nguyen also shed light on some of the positive developments like the government of Nepal’s decision to include the transmission line project under national pride project; transmission alignment workshops; issuance of formation order of Millennium Challenge Account (MCA) Nepal and appointment of the board members of MCA Nepal. “The executive directors and staffs will be appointed in a transparent manner,” she said.

The MCA is controlling entity that will monitor the execution of MCC projects and approve the budget.

As per Tory E Kofroth, country director for Nepal for MCC, the pilot phase of road rehabilitation will begin with the introduction of smart technologies in the near future. The Hetauda-Pathlaiya road section has been selected for the pilot phase of road upgradation.

Under the compact programme around 305 km of roads will be rehabilitated (upgraded) at a total cost of $52.2 million and 300 km of high voltage transmission lines will also be developed at a cost of $398.2 million.

These two projects are expected to address Nepal’s growth constraints by ensuring reliable power supply and paving the way for cross-border and multilateral power trading arrangements and lowering transportation cost.