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Donald Lu, the US assistant secretary of state for South and Central Asian Affairs, visited Nepal this week to take stock of the progress on the Millennium Challenge Corporation (MCC).

The US embassy in Kathmandu said Lu’s visit was a part of his regular diplomatic engagement in the region. In Kathmandu, he met with various leaders and ministers to discuss the progress on the MCC Compact to date.

The Compact has two components: construction of a transmission line and road maintenance. The transmission line project under the MCC envisions construction of  around 315 km of double circuit high capacity 400 kV transmission lines and three new electricity substations. The transmission line will pass through Kathmandu, Sindhupalchok, Nuwakot, Dhading, Makwanpur, Chitwan, Tanahun, Palpa, Nawalpur, and Parasi districts. 

Similarly, the road maintenance project will focus on the East-West Highway in Dang district. Based on the results of the pilot, MCA-Nepal will further complete the Lamahi to Shivakhola section. At present, the total road segment proposed for maintenance in the East-West Highway is approximately 77 km.

These projects are set to commence in August with a five-year completion deadline or by 2028. The projects will be executed by Millennium Challenge Accounts Nepal (MCA-Nepal).

Lu had played a vital role in getting the MCC endorsed through Nepal’s parliament. Nepal’s political parties were heavily divided on the issue of ratifying the Compact through parliament. Those against the Compact, mostly communist parties, had raised unfounded suspicion that the US was trying to deploy its army in Nepal in order to contain China.

The Compact was ultimately endorsed by Nepal’s parliament with declarative interpretation (which the US has not recognized) amid protests in the streets, as Lu had warned that the US could review its relationship with Nepal if the MCC was discarded. 

China too was against the MCC ratification, and had openly fallen out with the US on the issue. Beijing suspects that the Compact is part of the US Indo-Pacific Strategy to stop China’s growing influence.  

Though Nepal’s parliament has passed the MCC, the US is still not wholly convinced it will move ahead smoothly. This skepticism is not just born out of continuing political opposition to the MCC in Nepal, but also of the technical hurdles at the local level.     

The main hurdle, according to an official at the Ministry of Finance, is land acquisition for the transmission line project. In some areas, people are urging the MCA-Nepal to change the route of the transmission line because it falls right over their homes and farmland, which they are unwilling to let go. The modality of compensation for acquiring land has also not been finalized yet.  

In April, Khadga Bahadur Bisht, executive director of MCA-Nepal, had informed the meeting of the MCA-Nepal board of directors that a technical survey of the electricity transmission line was completed, except on some segments due to social issues. Three months later, the problem remains as it is.

There is a lack of cooperation between MCA-Nepal office and Nepal government officials to resolve the local and technical issues. The task of land acquisition is being undertaken by district administration offices.

Regarding the land acquisition, field verification is going on in seven districts, except in Nuwakot, Sindhupalchok and Kathmandu. With the MCC implementation set to come into force in August, the task is unlikely to be completed on time.

There is also the task of forest census, which too remains incomplete. Forest clearance is one complicated task which needs to be settled in coordination with the Ministry of Forest and Environment and its subordinates. Here too the MCA-Nepal office has been unable to coordinate effectively with the concerned forest offices.

CPN-UML leader Pradeep Gyawali, who is also former foreign minister, says the MCC should be implemented honoring the deadline without any obstructions as it has already been endorsed by the Parliament.

However, both government and MCA-Nepal officials are uncertain about timely completion of the projects. They are brainstorming whether to commence the project in August and gradually complete the remaining tasks or commence the work only after all outstanding problems have been settled. 

Despite the challenges and risks, one official said MCA-Nepal has fixed August end as an entry into force date for the MCC.  

The MCC Nepal Compact is a five-year $500 million grant agreement signed between Nepal government and the MCC in 2017. The Nepal government has agreed to invest an additional $197m in the program, for a total of $697m.

Initially, the project should have come into implementation in 2018 which was delayed by four years due to the controversy surrounding its parliamentary endorsement. 

Mrigendra Bahadur Karki, Executive Director, Center for Nepal and Asian Studies, says the central focus of the US in Nepal at the moment is smooth implementation of the MCC. 

He adds since the MCC was protested by internal and external forces, the US is worried that the same forces would not delay its implementation. 

Currently, there seems to be no significant political opposition to the MCC, but technical issues at the local level are likely to delay the project. In case of a delay, the MCC project cost is likely to increase and may require additional Rs 5bn to complete, say some officials. 

The Kathmandu District Court on Sunday extended the remand of 17 persons arrested in connection with the Lalita Niwas land grab case by five days.

According to SSP Dinesh Acharya of the Central Investigation Bureau of  Nepal Police, the court extended the remand for the fourth time today by five days.

"The investigation has been expedited so that it can be completed within 60 days," he said, adding, "Arrest warrants have been issued against some more people found involved in the case. Police are preparing to arrest them."

Seventeen individuals including Communications Secretary Krishna Bahadur Raut, Bhatbhateni Supermarket Chairman Min Bahadur Gurung and former election commissioner Sudhir Kumar Shah are in police custody.

The Kathmandu District Court had extended the remand for the first and second time by seven days, five days for the third time and five days for the fourth time today to keep them in custody.

Police had started an investigation in this case in a new way by detaining seven persons at a time on June 27.

Min Bahadur Gurung, Sudhir Kumar Shah, Dharma Prasad Gautam, Gopal Karki, Shivaji Bhattarai, Ghaman Kumari Karki, Baburaja Maharjan, Ramesh Kumar Pokharel, Dev Narayan Maharjan, Lokhari Ghimire, Dhruba Prasad Aryal, Krishna Bahadur Raut, Yograj Paudel, Narayandas Mishra, Rudra Prasad Shrestha, Bal Krishna Shrestha and Binod Paudel are in the custody.

Kaladhar Deuja, Surendraman Kapali and Hupendramani KC, however, were released on the basis of the court's stay order.

Deputy Prime Minister and Minister for Home Affairs, Narayan Kaji Shrestha, assured that security agencies would remain independent of any political influence, power centers, or money game while discharging their duty.

In a meeting held today with former senior officials of security agencies to discuss the ‘strengthening of peace and security,’ the Minister said that the Ministry and its subordinate bodies would strictly adhere to the Constitution, laws, and their designated responsibilities.

“We are devising comprehensive plans to enhance the overall performance of the Home Ministry and its subordinate bodies,” he stated. Furthermore, he said the Ministry has asked the Nepal Police and an investigation unit for ensuring impartial, independent, and efficient investigations into any incident. He said, “Police investigations are guided by laws, facts and evidence.”

He revealed that during the course of investigating cases of corruption and crime, complaints from respective areas are received.

When someone involved in irregularities in the political, administrative, or business sectors is on the verge of being brought under the purview of the law, there may be protests from people within their respective sectors, according to the Minister, who questioned, “Is it possible to promote the rule of law in such a situation and is the law applied only to the general public?”

“The culture of groupism has deeply affected the Nepal Police institution,” he said, adding that the government was actively working to intervene and eradicate such detrimental practices from the organization.

He hoped that security bodies would find a pace if intervention from the political leadership, power centers, the economic influence is prevented by promoting the rule of law.

As he said, he had proposed to the Parliament to remove the provision for 30-year service in the police administration, he said the provision will be discontinued by law. The Inspector General of Police is highly positive about the proposal, he said, adding that he was told that the IGP was ready to sacrifice for the removal of the provision.

Expressing his determination to implement the provision of voluntary retirement of police Constable and Head Constable completing 16 years of service and Assistant Sub-Inspector and Sub-Inspector completing 18 years of service, getting the pension in 20 years, the DPM and Home Minister said the matter is being discussed with the Ministry of Finance.

As he said, the Home Ministry is taking the initiative as to how the morale of police constables, head constables, and sub-inspectors could be boosted and how they can be made to work.

“The police have to work 24 hours; how can we work with a ‘depressed force’? Discussion is on with the Public Service Commission to make the promotion of the police constables and the junior officers regular,” he asserted.

Nepal Police and the Armed Police Force (APF) Nepal’s former Inspectors General and Additional Inspectors General lauded the steps initiated by the present government in controlling corruption and the promotion of good governance.

On the occasion, they had given suggestions for policy and structural reforms, timely increment in the pay and facilities, paying attention to the career development of police personnel, making the transfer, promotions, and foreign training predictable, dissuading impunity, and bringing the National Investigation Department under the Home Ministry.

Home Secretary Dinesh Bhattarai, Inspector General of Nepal Police Basana Kunwar, APF Nepal’s Inspector General Raju Aryal, high-level officials of the Ministry, police former chiefs, and police former high officers were present in the interaction.

Finance Minister Dr Prakash Saran Mahat has left for India on Sunday.

He left for the southern neighbor this morning to take part in the Third G20 Finance Ministers and Central Bank Governors (FMCBGs) meeting.

Along with the finance minister, Shreekrishna Nepal Chief at the International Economic Cooperation Coordination Division of the Finance Ministry and minister’s personal secretary Yuvaraj Pandey have also left for India.

The meeting will start at the Gujarat-based Gandhinagar of India from Monday.

Finance Minister Mahat will return home on Wednesday.

Though Nepal is not a member of G20, Finance Minister Mahat will participate in the meeting as a guest member.

World economy and world health, sustainable finance and infrastructure development, global financial scenario, international tax system and financial inclusion are among the major agenda of discussions in the meeting.

Finance minister Nirmala Sitharaman and Governor of Reserve Bank of India Dr Shakti Kanta Das will jointly chair the meeting.