Kathmandu, July 21

The United States and the government of Nepal are all set to sign the Millennium Challenge Corporation (MCC) investment compact worth $630 million — the largest ever US investment grant assistance project to Nepal — in September.

A visiting US MCC team led by Fatema Z Sumar, the regional vice-president for Europe, Asia, the Pacific and Latin America, informed that both MCC and the government of Nepal are in the final stage of signing the five-year $630 million investment in the power and transportation sector of the country.

“The development phase of proposed MCC compact with Nepal is in the final stage. The compact aims to improve the availability of both electricity and control transportation costs in Nepal,” said Sumar.

MCC expects the compact to be endorsed by the Cabinet of Nepal soon, after which the MCC board will endorse it in the following few weeks. The US Congress will have to grant the final approval before the two parties would be able to sign the investment contract.

Of the total investment, MCC will inject $500 million as grant while Nepal will have to contribute $130 million in MCC investment projects in the aforementioned two sectors.

MCC is investing the bulk amount of US grant in the Electricity Transmission Project (ETP), while only limited grant is being invested in the Road Maintenance Project (RMP).

Under ETP, MCC will construct up to 300-kilometre high voltage power lines for Nepal’s east-west high voltage transmission backbone, which would transmit power equivalent to five times the current installed generating capacity of Nepal. Addition of a second cross-border transmission line between Butwal and Gorakhpur to facilitate electricity trade with India, and construction of substations to help Nepal consolidate electricity generated from a number of hydro projects under construction are two other major components of ETP.

Likewise, the RMP project is aimed at strengthening the road maintenance in Nepal and complement existing efforts to build new roads and prevent further deterioration of the strategic road network through timely interventions, data-driven planning, introducing international best practices and technology to improve road maintenance practices, among others.