Nepal’s MCC Projects Back on Track with Key Contract Signings

Nepal’s major infrastructure project, supported by a grant from the U.S. Millennium Challenge Corporation (MCC), is back on track.

The project, which involves building and improving high-voltage power lines, had stalled due to some issues. But now, it’s moving forward again after the government of Nepal and the U.S. signed new agreements.

What’s Happening Now?

The project’s local management office, Millennium Challenge Account Nepal (MCA-Nepal), has signed contracts with two international companies to build a large part of the new power lines.

The contracts are for two key sections:

• A 400kV transmission line between Ratamate and New Damauli.
• A 400kV transmission line between New Damauli and New Butwal.

These two projects are worth about $154.5 million (around 21.17 billion Nepalese Rupees) and will include designing, building, and testing 180 kilometers of power lines.

Why Did the Project Stop Before?

The project faced delays partly because the initial bids from companies were too expensive 66% higher than the project’s budget. This led to the cancellation of the first bidding process.

The U.S. government even approved an extra $50 million in funding to cover the increased costs, but it’s not yet clear if Nepal will accept the additional money.

Project Timeline and Goals

The MCC project officially started on August 30, 2023, with a five-year deadline. Any money not used within this timeframe must be returned to the U.S.

The total project is a partnership between the U.S. and Nepal:

• The U.S. is providing a $500 million grant.
• Nepal is contributing $197 million (an increase from the initial $130 million).

This joint effort aims to build a modern power grid and improve roads, which will help boost Nepal’s economy and electricity trade with its neighbors.