Nepal’s MCC debate lessons

Bishal Thapa

Bishal Thapa

Nepal’s MCC debate lessons

The MCC project got mired in a debilitating national debate, forcing the government to delay its discussion in parliament. Why did a transformative deal evoke such a fierce public debate?

The United States offered Nepal $500 million in grants for the construction of transmission lines and strategic roads through the Millennium Challenge Corporation (MCC). It was meant to be a transformative deal: a grant large enough to unlock in one stroke the most important chokepoints in Nepal’s power sector.

Instead, the MCC project got mired in a debilitating national debate, forcing the government to delay its discussion in parliament. Why did a transformative deal evoke such a fierce public debate?        

Many have attributed this to Nepal’s usual political squabbling or some geopolitical machination. But such simplistic explanations cloud other meaningful reflections.

No matter how the government comes out on the MCC, there is plenty to learn from the debate itself.

The debate showed that political power in Nepal is more diffuse than is believed.

The public debate only flared up late in the process, as the compact was to be presented in parliament. The debate’s speed and intensity surprised many.

Prior to the start of the debate, public communications around the compact were sparse. The collective set of public comments by handlers, both in the MCC and the government, presents an illuminating picture of presumptuous arrogance: the old presumption that if you convince five people at the top, everyone else will follow.

Nepal has changed. Welcome to the cacophony (or inconveniences) of democracy.

In the 12 months since the start of the debate on MCC, Nepal has borrowed approximately $500 million—equivalent to what the MCC offered—from the World Bank and Asian Development Bank. Why should these borrowing not be subject to the same level of transparency, discourse, and parliamentary approval? Who will be held accountable if these loans prove unproductive?   

Where the debate will lead us is unclear, but the discourse itself is critical to establishing accountability.  

The debate exhibited that the promised benefits (for example employment, income, economic growth) from building thousands of megawatts worth of hydro power plants are either not tangible enough or the public doesn’t believe it.

By the time the debate had started, load-shedding had ended and the benefits of MCC projects centred entirely on illustrating the economic gains from new power plants. These benefits were estimated and presented.

Against the promise of so much benefit, opposition to the MCC centered on perceived loss of sovereignty. Why was it that so many Nepalis were drawn to arguments about the perceived loss of sovereignty despite the opportunities for economic benefits from building new power plants? Because, not many in Nepal believe in these economic benefits.

Nepalis care for electricity and having adequate supply. But the idea that building many new power plants will lead to tremendous growth just didn’t resonate enough. Why? Perhaps because, thus far in Nepal, the process of building hydro plants has benefited only a small group.     

The tragedy for the MCC is that load-shedding ended three years too early. If the MCC project had arrived in parliament earlier in the load-shedding era, and had it argued for an end of power cuts, the compact would have passed immediately. End of load-shedding—highly tangible, we all felt its pain. Prosperity from building new hydro plants—too abstract and hypothetical, which only a few have enjoyed so far.

The debate also highlighted the need for Nepal to establish centers that could serve as sources for credible neutral information.

The MCC compact with Nepal was an innovative design but also a complex structure, clearly new for Nepal at many levels. It required an act of parliament, a bilateral agreement with a third country, an odd inclusion of a small investment in “strategic roads” within a project on the power sector, and raised questions about Nepal’s ability to compete in Indian power markets.

There was enough in the agreement for everyone with a point of view. This was exactly what happened as the debate exploded. The discourse spun out of control, feeding a frenzy from the absurd to the fantastical.

Where should ordinary Nepalis turn to for reliable and credible information while in the midst of a scorching debate? To answer that question, those in authority must first acknowledge that ordinary Nepalis have a right to know, and second, that their views matter.        

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