KATHMANDU: The US Government's Millennium Challenge Corporation (MCC) Board of Directors this week approved a $500 million compact with Nepal.

In a statement today, the US Embassy in Kathmandu said its first compact in South Asia.

The Government of Nepal has committed to contribute an additional $130 million to support MCC's investment and the compact is expected to be singed by the governments in September, it said in the statement.

"I am pleased to announce the Millennium Challenge Corporation Board of Directors' approval of the Nepal Compact," Acting MCC CEO Jonathan Nash said. "This compact with Nepal focuses on the power and transportation sectors to improve regional connectivity, spur private investment, drive growth, and reduce poverty. The contribution of an additional $130 million for the Nepal Government, which is the single largest up-front country contribution in MCC's history, enables out investment to have an even greater impact." as stated in the statement.

The compact includes two projects.

The electricity Transmission Project is designed to transform Nepal's power sector by expanding and strengthening the high voltage electricity transmission network to support new investments in generation and other construction of 300 km high voltage power lines for cross-border transmission line to facilitate electricity trade with India, said the Kathmandu-based US Diplomatic Mission in the statement.

The Millennium Challenge Corporation is an independent US Government agency, created in 2004, works to reduce global poverty through economic growth, provides time-limited grants and assistance to poor countries that meet rigorous standards for good governance, fighting corruption to respecting democratic rights.