Following the completion of the United States’ foreign aid review under the Donald Trump administration, the Millennium Challenge Corporation (MCC) Nepal Compact has resumed work with “renewed momentum and shared commitment from both sides.”
This week, MCA Nepal signed two major contracts to advance its electricity transmission line projects. Deputy Vice-president of MCC John Wingle, who is currently visiting Nepal, has been in talks with government officials to address technical challenges, primarily related to land acquisition and forest clearance. These issues have slowed progress on transmission construction. Despite significant cuts to US foreign assistance, the Trump administration decided to continue MCC projects in Nepal, framing MCC support not as aid, but as an ‘investment to promote business growth and stability worldwide.’
In signing these contracts, Wingle reaffirmed the US commitment to shared priorities and Nepal’s development goals. “We are honored to work alongside our Nepali counterparts to improve the availability and reliability of electricity in Nepal and enhance regional power trade and integration.” From 2018 to 2022, MCC projects deeply polarized Nepali society, facing both strong support and open opposition, notably from China. Under the agreement, MCC projects must be completed within five years, but two years have already passed. Delays from the American side have raised the likelihood of deadline extensions.
In domestic politics, the Election Commission has decided that Ranjita Shrestha will remain chairperson of the Nagarik Unmukti Party, despite claims from rival leaders that she had been removed. The Commission said the rival faction failed to follow proper procedures to change the leadership. The party, founded by Resham Chaudhary, has been in turmoil over internal disputes. It has announced plans to withdraw support for the government but has yet to formally notify officials due to the ongoing feud.
Similarly, tensions within the Rastriya Prajatantra Party (RPP) escalated this week. On Aug 13, a clash broke out in Kathmandu between supporters of party chair Rajendra Lingden and those of his rival, Dhawal Shumsher Rana. The Rana faction has been openly criticizing Lingden ahead of the party’s upcoming general convention and is reportedly creating parallel structures nationwide, deepening internal divisions. Earlier this year, the RPP organized protests in Kathmandu and other districts calling for the restoration of monarchy.
The CPN (Unified Socialist) also faced internal strife after former Prime Minister Jhala Nath Khanal declared that the party’s split was a mistake and urged Chairman Madhav Kumar Nepal to step down. Following discussions, both leaders have agreed to minimize their differences and refrain from public criticism in line with party statutes.
Meanwhile, Rastriya Swatantra Party (RSP) Chairman Rabi Lamichhane’s attempt to secure release from judicial custody failed after the court denied bail. In his absence, the party remains embroiled in controversy and continues to obstruct Parliament over the visit visa scam. Lamichhane has requested to be transferred to Kathmandu, but the government has not acted despite a court clearance.
Inside the Nepali Congress (NC), efforts are underway to unseat Sher Bahadur Deuba as parliamentary party leader, led by Shekhar Koirala and Gagan Kumar Thapa. However, they lack the sufficient number of lawmakers supporting the proposition. This week, Prime Minister KP Sharma Oli said a senior NC leader privately confirmed the shortfall and reiterated his belief that the current coalition will continue until the 2027 national elections.
The NC has, however, resolved a dispute in Bagmati Province. Chief Minister Indra Bahadur Baniya secured a confidence vote after Deuba persuaded Bahadur Singh Lama to support him, reportedly promising ministerial positions to Lama’s allies.
Former President Bidya Devi Bhandari has continued low-profile political activities despite her party rescinding her membership. Reports suggest she is preparing to open a contact office to formalize her engagements. For years, she has used the Madan Bhandari Foundation as a platform, which prompted Prime Minister Oli to criticize its activities this week. Many leaders once close to Bhandari are now distancing themselves, fearing disciplinary action.
The CPN-UML is preparing for its statute convention, where key outcomes are already expected — no 70-year age limit and no two-term leadership cap. Next year’s leadership selection convention is anticipated to endorse Oli’s continuation. Party leaders have compared Oli’s leadership ambitions to those of India’s Narendra Modi and China’s Xi Jinping.
In the CPN (Maoist Center), Chairperson Pushpa Kamal Dahal indicated no imminent change in government, saying there were no plans to form or join a new coalition. Prime Minister Oli suggested Dahal made the statement after failing to alter the current alliance.
Beyond party politics, Ramhari Khatiwada, chair of the State Affairs and Good Governance Committee of Parliament, resigned this week, stating he had always served as an honest representative. He told the House session on Tuesday that he returned his official vehicle and benefits the day an error in the Civil Service Bill’s “cooling-off period” provision came to light.
Prominent Madhesi leader Anil Kumar Jha left the Loktantrik Samajbadi Party led by Mahanta Thakur and revived the Nepal Sadbhawana Party. In a separate development, the Nepal government endorsed the country’s first National Artificial Intelligence Policy (2025). The US, India and China have expressed interest in supporting Nepal’s AI initiatives, though governance frameworks are still being developed.
In the Madhes Province, monsoon rains have finally arrived, ending a prolonged drought and accelerating paddy transplantation. According to the Ministry of Agriculture and Livestock Development, planting has been completed on 77 percent of paddy fields in eight districts and could reach 80 percent this year. Officials warn, however, that delayed planting may reduce productivity.
Nepal has also waived climbing fees for 97 lesser-known mountains, ranging from 5,870 to 7,132 meters, located in Karnali and Sudurpaschim provinces. The move aims to attract climbers to new destinations, boost local economies and diversify Nepal’s mountaineering offerings.
