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Chief Executive Officer of Millennium Challenge Corporation (MCC) Alice P. Albright paid a courtesy call on Prime Minister Pushpa Kamal Dahal on Tuesday.

During the meeting, the duo discussed various aspects of the Nepal-US cooperation including the MCC projects, the PM’s Secretariat said.

On Monday, the MCC CEO held a separate meeting with CPN-UML Chairman KP Sharma Oli, Energy Minister Shakti Bahadur Basnet and Minister for Physical Infrastructure and Transportation Prakash Jwala.

The leaders discussed the ways for the successful implementation of the MCC projects.

Currently, MCC CEO Albright is in Nepal to celebrate the MCC's entry into force.

The Millennium Challenge Corporation (MCC) Nepal Compact hit a roadblock after the Finance Ministry raised concerns about the elevated cost of the transmission line project. Finance Minister Prakash Sharan Mahat has expressed dissatisfaction over the financial proposals, which have exceeded the estimated cost. 

According to the Finance Ministry sources, discussions have started to call for the tender again for the construction of the transmission lines. Mahat, on Monday, discussed with MCA-Nepal executive director Khadga Bahadur Bisht about issuing the tender again. 

Six Indian companies had submitted bids to construct the power line which will be constructed in three separate packages. An association of Megha Engineering and Infrastructure Ltd and Power Mech Projects Ltd along with Kalpataru Power Transmission Limited, KEC International Ltd, Transrail Lighting Ltd, Tata Projects Ltd, and Larsen & Toubro Ltd participated in the bid. 

MCA-Nepal has prepared an estimated cost of constructing the transmission line at $226m. However, when financial proposals were opened, the total cost of the three packages stood at $365m, a staggering 66 percent increase over MCA Nepal’s initial estimates. With the huge difference between the initial estimates and financial proposals, the Finance Ministry is inclined to initiate a fresh bidding process for the construction of the transmission lines.

“The amount quoted in the financial proposals is unusually higher than the estimated cost,” said a senior official of the Finance Ministry. “Even if we were to accept the lowest bid, it would pose a significant budgetary challenge for us. We have no alternative but to initiate a fresh tender process.” Amid the Finance Ministry’s reservation over the pricing, the MCA Nepal has not made any official statements or disclosures regarding the matter.

MCC, the US aid agency has committed to provide $500m while the government had earlier pledged $197m to implement the transmission line and road improvement projects under the MCC Nepal Compact. Since the MCC will not provide an additional amount, the Finance Ministry believes it has to bear the additional financial burden if it accepts the financial proposals.

According to Finance Ministry officials, should these financing proposals be accepted, half of the total budget would have to be allocated to the transmission lines, potentially leaving insufficient funds for other critical components of the Nepal Compact. Initially, the government had planned to invest $130m, but an additional $67m had been contributed for the Nepal Compact. 

A 315-km high-capacity transmission line will be built and a section of the East-West Highway upgraded under the $500m US aid. Five segments of transmission lines to be built are—New Butwal-India Border (18km), New Butwal-New Damauli (90km), New Damauli-Ratmate (90km), Ratmate-New Hetauda (58km), and Ratmate-Lapsephedi (59km). Three substations will be built in Ratmate, Damauli, and Butwal.

Once completed, these transmission lines are expected to provide a vital missing link for power projects of different river basins to the existing high-voltage grid in Nepal.

The government has allocated Rs 10.84bn for the MCA-Nepal for the current fiscal year. While Rs 9.27bn had been set aside for the entity in the last fiscal year, only Rs 4.11bn was spent, according to the Finance Ministry.

Six years after Nepal signed an agreement with the MCC, the much-debated MCC Nepal Compact entered into the implementation phase on Aug 30. The execution of the Nepal Compact will span a precise five-year duration from its initiation, at which point the responsibility for the projects will shift to Nepal. Once this five-year period concludes, the funding from the MCC for the execution of the MCC Compact initiatives will cease.

Initially, the Nepal Compact was supposed to enter into the implementation stage on 30 June 2020. However, the delay in the ratification of the compact by Nepal’s Parliament amid a controversy threw the US assistance into uncertainty. The Nepal Compact finally moved ahead after the parliament endorsed it in Feb 2022. 

Price quoted by bidders

On Tuesday, Prime Minister Pushpa Kamal Dahal stood before the Parliament to answer a slew of questions from parliamentarians. 

The topics raised in the Q & A session included transitional justice, government action against corruption, good governance, farm reforms and education for all. 

In all, Dahal responded to more than a dozen questions coming from cross-party lawmakers. Out of them, we have selected top 10 questions and responses from PM Dahal.

Ek Nath Dhakal: Isn’t it your duty to meet Gangamaya Adhikari, who has been on a hunger strike for years seeking justice?

The Truth and Reconciliation Commission has been formed for the administration of transitional justice in order to deal judicially with the incidents during the conflict and the government is committed to the administration of transitional justice as soon as possible. Regarding Gangamaya Adhikari, under the prevailing legal system, the government is providing humanitarian services and protection to her. The government, to date, has provided Rs 3.74m for her treatment.

Asim Shah: The opening of corruption files was just to keep other parties in size. Is the stunt over now?

Good governance has been a priority since the formation of the government and because of that, we have succeeded in eradicating the hatred of the people toward the political system.

The public has also started to believe that our good governance was possible because of the unbiased investigations. No guilty should escape and no innocent should suffer. Not only my party members but even if the prime minister is found guilty in the investigation, there is no need to leave him out of the radar. All those involved in corruption will be prosecuted on the basis of facts and evidence.

Rishikesh Pokharel: The progress status of most of the national pride projects is worrisome...

I am regularly taking progress reports of national pride projects. Necessary budget has also been allocated for the timely completion of these projects. Two of the national pride projects have been completed and the work progress of 14 has reached 80 percent. The progress of five projects is 50 to 80 percent and the progress of two projects is 50 percent. The government is making efforts to complete these projects as soon as possible.

Ishwari Devi Neupane: Will your speech about turning Nepal to a caste state help in establishing social harmony?

The expressions that disrupt social harmony will not be tolerated under any circumstances. The government is determined to prevent any kind of action that disturbs social unity, harmony and social coexistence that has been maintained since time immemorial.

Nepal being a multiracial and multicultural nation, people of different castes, races, religions and cultures have been living together with mutual cooperation, respect and deep harmony since centuries. Unity in diversity is our uniqueness and also the basic character of Nepali society. By maintaining the coexistence of all, protecting and promoting originality, our national unity will be sustainable and strong.

Aain Bahadur Shahi: During your visit to China, is there any plan to discuss the opening of Namche Langa border?

During my upcoming visit to China, there will be talks about opening a new trade channel. It is almost certain that there will be a talk about opening the Namche Langa crossing in Mugu. The government will give priority to the development of tourist areas including Rara.

Asha BK: Caste-based discrimination and untouchability is still there in the society and violence is still occuring in various parts of the country, what is your take on it ? 

Nepal’s constitution 2015 has ensured rights against untouchability and discrimination as a fundamental rights of every citizen. So the government is committed to ending such discrimination and taking action against those who are involved in such crimes.

Urmila Majhi: Nepal is known as an agricultural country but our productivity is going down and people are not interested to be involved in the agriculture sector. What is the government’s plan to motivate the farmers?

To achieve a sustainable independent economy, the government has put a high priority on qualitative and reformative agriculture. Government has given high-priority to mechanization, modernization and commercialization to improve agricultural productivity.  The government has allocated the sufficient resources for agriculture.

Asthma Chaudhary: The number of eye patients rising across the country, what is the government’s plant to control this epidemic?  

Government has launched a nation-wide campaign to control conjunctivitis.  Similarly, several initiatives have been launched at the local level in order to create awareness in the local level.

Urmila Thebe: Government has adopted the policy of free-education but everywhere the cost of education is increasing, but the government is still hesitant to table a bill on education which aims to address those issues.

Government is fully committed to provide a free and affordable education to all. As stated in the constitution, the government has made necessary arrangements to provide free education to all secondary-level students. Similarly, local governments are investing in the education sector.

Ishwari Gharti: Rolpa district was the base of the 10-year long insurgency but the government under your leadership has not taken any initiative to improve the people’s livelihood, what is your plan for the future? 

There is do doubt that Rolpa has played a historic role in all political movements of Nepal. In every historical juncture, we appreciate the contribution made by the people.  I have been giving high-priority for the social and other development of Rolpa district.

Interpretative declaration should be implemented: PM Dahal

Prime Minister Pushpa Kamal Dahal has said that interpretative declarations adopted by Parliament while endorsing the grant under Millennium Challenge Corporation should be implemented.

Speaking at a public program on Tuesday, the head of the government said that he would inquire with the senior MCC officials whether the US is ready to make the declarative interpretation as part of MCC compact.

Dahal further added “If something wrong happens in declarative interpretation, the key base to go to the street will be interpretative declaration.”  The interpretative declaration is the property of the Parliament and there are doubts whether it will be implemented, PM Dahal said. He further added that interpretative declaration is a valid document under international law. 

Millennium Challenge Corporation Compact Operations Department Cameron Alford arrived in Kathmandu on Tuesday.

The Kathmandu-based US Embassy said the US government was excited to know the progress of the MCC compact.

It has been made possible through regular cooperation among wider stakeholders, governments in Nepal and political parties, the embassy sources said.

"We are committed to collaborate with MCA-Nepal to ensure successful implementation of the compact. All concerned parties are working to attain the goals of the MCC compact on time", the embassy said.

Preparations were made to commence the implementation of the $500 million MCC compact from today onward. The project related to energy and road infrastructure development is supposed to spur economic growth and reduce poverty in Nepal.

Noting that the MCC had received explanatory declaration last year, the US Embassy said they had accepted the explanatory note as part of the compact.

According to the agreement, August 30 marks the commencement of the implementation of the five-year project.

Ahead of implementation of Millennium Challenge Corporation which was endorsed by Parliament, some fringe communist parties have begun criticizing the agreement.

The meeting of the board of directors of the Millennium Challenge Account Nepal Development Committee (MCA Nepal) held on August 16 decided to implement the MCC agreement. Senior MCC Officials have arrived in Kathmandu to witness the formal implementation of the MCC-Nepal compact.

Madhav Kumar Nepal, a former Prime Minister and Chairman of CPN (Unified Socialist) - a ruling partner, has called for more discussion on the 'interpretative declaration' of the MCC.

Speaking at the meeting of the International Relations and Tourism Committee of the House of Representatives on Monday, Nepal said concerns that have been raised regarding the MCC must be addressed. "Issues related to nationality and other significant matters have come to the forefront. Similarly, concerns have been voiced on the implementation of the interpretative declaration of the MCC," Nepal said.

He said Nepal should move ahead in accordance with a policy of non-alignment and adherence to the principles of the UN Charter.

Similarly, Jhala Nath Khanal, another former Prime Minister and senior leader of the Unified Socialist, termed MCC agreement an unfortunate development for Nepal. "The MCC agreement is not in Nepal's best interest, and some of our leaders have inadvertently damaged the country's reputation,” Khanal said.

Addressing a separate event in Kathmandu, Khanal said he had no information about parliament. “I knew it was signed in agreement after it was tabled in parliament. I raised serious concerns about the agreement when it was presented for endorsement.”

Similarly, Maoist Center General Secretary Dev Prasad Gurung said although parliament has attached an interpretative declaration to the MCC, the US government hasn't said anything about the agreement. "Since the US hasn't said anything about the declaration, this process cannot conclude," he added.

The official statement of MCC released after the MCC agreement was ratified by the parliament doesn't mention anything about the interpretative declaration. "The decision to ratify the Nepal Compact has always rested with the Government of Nepal as a sovereign democratic nation," the statement said.

In the meantime, the CPN (Maoist) led by Mohan Baidya has declared its intent to prevent the implementation of the MCC Compact.

CP Gajurel, a leader of CPN (Maoist), said that his party would organize protests in various parts of the country to oppose the MCC's implementation. He said that although the MCC agreement has been ratified by parliament, it doesn’t mean that it cannot be reconsidered. "While the parliament approved the MCC, it doesn't mean that it cannot be reversed. The government retains the authority to distance itself from the MCC. The authority rests with the people of Nepal," he added.

Gajurel reaffirmed his party's commitment to continue protests until the MCC agreement is rescinded.

MThe government is using the $500 million MCC Compact to upgrade a 77-kilometer segment of the East-West Highway and the construction of a 315-kilometer 400kV transmission line along with three substations.

The parliament ratified the MCC agreement on February 27, 2022.

Millennium Challenge Corporation (MCC) Nepal Compact will go into the implementation phase from August 30. There has been an agreement to set August 31 as the entry into force of the MCC Nepal Compact. The MCA Nepal board meeting held on Wednesday agreed to consider the last of August as the entry into force (EIF) of the Nepal Compact.

The government officials in the MCA-Nepal board had initially said that the EIF should be moved ahead because of the lack of preparation. However, MCA Nepal, a special-purpose vehicle established to implement the compact, insisted that the entry into force be set for Aug 31. The countdown for the five-year project will begin from the day of EIF. 

“The agreement has been made regarding MCC Nepal Compact's entry into force on Wednesday,” said a board member of MCA Nepal. It will be formalized after approval from the MCC headquarter.

As part of preparatory works, the project site should be cleared and the contract should be signed at the place where the project will be implemented. While the contract process of transmission line projects has already started, the land acquisition has not yet been completed.

According to the source, the announcement of entry into force has been made on the basis that the land acquisition will be completed by the time the contractors are selected.

A 315-km high-capacity transmission line will be built and a section of the East-West Highway upgraded under the $500 million US aid. Five segments of transmission lines to be built are—New Butwal-India Border (18km), New Butwal-New Damauli (90km), New Damauli-Ratmate (90km), Ratmate-New Hetauda (58km), and Ratmate-Lapsephedi (59km). Three substations will be built in Ratmate, Damauli, and Butwal.

Once completed, these transmission lines are expected to provide a vital missing link for power projects of different river basins to the existing high-voltage grid in Nepal.

MCC, the US aid agency has committed to provide $500m while the government had earlier pledged $197m to implement the transmission line and road improvement projects under the MCC Nepal Compact. 

The government has allocated Rs 10.84bn for the MCA-Nepal for the current fiscal year. While Rs 9.27bn had been set aside for the entity in the last fiscal year, only Rs 4.11bn was spent, according to the Finance Ministry.

With only two weeks left for entry into force, the preparatory work of the MCA Nepal Compact is far from over. Mainly, the land acquisition for the transmission lines has not been completed. MCA-Nepal has to acquire lands in Chitwan, Nawalparasi and Nawalpur, Kavrepalanchok, Kathmandu, Dhading, Makwanpur, Palpa, Rupandehi, and Tanahun for the transmission line project.

Except for Kathmandu, the process of land acquisition has started in other nine districts but has been completed. A compensation and compensation determination committee has been formed under the coordination of the Chief District Officer.

Six Indian companies have submitted bids to construct the power line which will be constructed in three separate packages. An association of Megha Engineering and Infrastructure Ltd and Power Mech Projects Ltd along with Kalpataru Power Transmission Limited, KEC International Ltd, Transrail Lighting Ltd, Tata Projects Ltd, and Larsen & Toubro Ltd participated in the bid. 

The three packages of the power line include Lapsiphedi-Ratmate-New Hetauda 400kV D/C Transmission Line, Ratmate-New Damauli 400kV D/C Transmission Line, New Damauli-New Butwal 400kV D/C Transmission Line (Base), and New Butwal Nepal/India Border 400kV D/C Transmission Line. The high-capacity transmission lines will be built connecting Nepal’s major power consumption centers including Kathmandu Valley, Butwal, and Hetauda. This transmission line will also work as a bridge to link the eastern and western parts of the country with high-capacity transmission lines. 

The MCA Nepal has also opened a tender for the construction of the substation. The last date for the submission of the bid is Sept 4. 

The MCA Nepal is planning to move forward with land acquisition and implementation together. The contracts are likely to be signed by September/October.

The Millennium Challenge Corporation (MCC) Compact that was signed between the Ministry of Finance and the US Government around six years ago has reached the entry into force (EIF) phase.

According to the Millennium Challenge Account (MCA)-Nepal Development Committee, preparations are on to announce the date for EIF regarding the MCC soon. The Compact was endorsed by the federal parliament along with a 12-point descriptive note in February last year.

Initially, it was agreed that $500m shall be provided in grants to Nepal, while the government shall bear $130m, expecting the total cost of the MCC project to remain at $630m. But the ‘supplemental agreement’ over the MCC that was signed in last May-June, demands that the government bear additional $67m, seeking its total contribution of $197m.

Nepal was supposed to take up the 20.63 percent economic responsibility for the MCC project and now it has risen to 28.26 percent. The increased responsibility amount is equivalent to Rs 900m. The preparations for the announcement of EIF date without meeting all the preconditions is another concern regarding the implementation of projects.

The acquisition of land for the implementation of MCC Nepal Compact projects, as well as the guarantee of the land use rights within forest areas is still incomplete. The Compact mandates the project implementing body, MCA-Nepal, to complete the projects within five years of the declaration of EIF. But there are doubts the projects will complete on time. 

This article primarily highlights the factors contributing to the increase in the cost of Compact implementation and sheds light on the reasons behind the decision to proceed with the EIF without fulfilling all the prerequisites. 

On May 23, the government decided to endorse the Finance Ministry’s proposal to revise the agreement between Nepal and the MCC and increase the government’s contribution to the projects. On the basis of the decision, Nepal Electricity Authority (NEA) and the MCA-Nepal on May 30 signed the ‘supplemental agreement’. 

The MCA-Neal has issued a public statement stating that the government has decided to include additional endeavors included in the electricity transmission projects under the MCC Compact at the request of the NEA. The statement further mentions that the additional budget of $67m required to implement these additional endeavors will be managed from the major budget of the Compact. In the event of the full utilization of the allocated budget, the insufficient funds will be borne by the NEA.

The additional budget required for the implementation of the Compact is to be considered as the government's contribution, and it will be adjusted in the relevant schedule of the Compact. Road and electricity projects are the areas of priorities for Nepal as identified by the MCC Compact signed on 14 Sept 2017. As per the statement, the cost amount of $67m which has been recently added will be spent for the construction of the section of the 400kV New Butwal-Gorakhpur Nepal-India Inter-country transmission line toward the Nepal side and for increasing the capacity of three substations.

This transmission line project is in the construction phase. However, it is not clear why the additional budget for the construction of the transmission line from New Butwal Substation to the India border is already mentioned before in the MCC Compact. The Schedule-1 (B) (1) of the MCC Compact states that the transmission line project will be constructed under MCA-Nepal.

It is mentioned in the Compact that around 300 kilometers of double circuit 400 kV transmission line would be constructed within Nepal. The Compact states that the transmission line would be constructed on five different routes—from Lapsiphedi of Kathmandu up to Ratamaate, from Ratamate to Hetauda, from Ratamate to Damauli, from Damauli to Butwal and from Butwal to the India border. This means that the plan of constructing the transmission line from Butwal to the India border for which the added cost has been managed is included in the existing cost of $630m.

When the RSS approached the MCA-Nepal for its comment regarding allocation of additional budget for the construction of the transmission line on this route, officials stated that the amount added in the MCC Nepal Compact programme would be merged with the Electricity Transmission Project budget, and it would be used for increasing the capacity of three substations by installing extra 'bays' as per the requirement and request of the NEA.

Asked whether the amount merged in this way can be termed as an increment in the project's cost, MCA-Nepal’s information officer Rajib Dahal said the cost automatically goes up when extra work has to be carried out. “Additional work of expanding the capacity of the under-construction three substations by installing extra bays is being carried out from the amount added on behalf of the Government of Nepal to the MCC Nepal Compact, as per the NEA's need and request,” he said.

The countdown for the five-year project will begin from the day of EIF. According to the preliminary agreement, EIF was supposed to start on 30 June 2020. However, many factors like a dispute in getting the compact endorsed from the parliament caused the delay. 

Despite the delay of nearly two years, MCA-Nepal has not yet completed the preparation works to ensure smooth execution of the projects. Land acquisition as a prerequisite for EIF has yet to take place. According to Section 8.1 of Article 8 of the MCC Compact, the government will ensure the full and expeditious cooperation of all relevant government entities to ensure that all land acquisition, site access, and forest clearance required to implement the Compact is provided in a timely manner, and consistent with all MCC policies. 

Asked about the implementation of the Compact, the MCC Nepal said the date for its implementation would be announced within the Nepali month of Bhadra. 

The MCA-Nepal requires a total 1,471 hectares of land for the electricity transmission project, and around 20 hectares for the construction of a substation at Ratmate in Nuwakot. It requires another 104 hectares of land for constructing around 856 electrical towers.

There is still a dispute regarding the acquisition of land required for constructing a substation. Likewise, the distribution of compensation for the land acquired for the transmission line has yet to begin. The MCA-Nepal has said except for a family-disputed plot, the distribution of compensation for the land acquired for a substation at Ratamate has been completed. A preliminary legal process has also been initiated to acquire the land required to build the electrical towers.

The legal process to determine compensation amounts for the land acquired for the project has started under the leadership of relevant chief district officers. The affected areas have 122 community and government forests. The government has allocated over Rs 10.8bn for the MCC projects in this fiscal year 2023/24. Out of the allocated budget, Rs 8.7bn will go for the electricity transmission project, Rs 1.5bn for road repair, Rs 2m for monitoring and evaluation, and Rs 555m for administrative work. 

RSS

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. 

Kathmandu: US Assistant Secretary of State Donald Lu has returned from Kathmandu after understanding the progress made in implementing the Millennium Challenge Corporation (MCC) project in Nepal. The MCC is scheduled to be implemented starting from August next year. 

During his one-day visit on Friday, Lu met with various Nepali officials, including Prime Minister Pushpa Kamal Dahal, Foreign Minister NP Saud, Nepali Congress President Sher Bahadur Deuba, and CPN-UML Chair KP Sharma Oli. Lu expressed interest in Nepal’s level of readiness for the MCC implementation. 

Upon his arrival in Nepal, Lu’s initial meeting was with Deuba, who was the Prime Minister when the MCC was approved by Parliament. According to the Deuba Secretariat, Lu inquired about Nepal’s preparation for the implementation of the MCC. In response, Deuba reassured that there would be no obstacles in implementing the matter that had already been passed by the House. 

After meeting Deuba, Lu also held discussions with Foreign Minister Saud. A senior official from the Ministry of Foreign Affairs mentioned that Minister Saud assured Lu that Nepal is fully prepared and there would be no issues with the MCC implementation. 

Quoting Lu’s statement, a source from Baluwatar said that Lu appreciated Nepal’s preparations and assured that the MCC is in Nepal’s best interest. In response, the Prime Minister stated, “Nepal is ready to implement the MCC.”