Millennium Challenge Account-Nepal on Tuesday requested prospective contractors to come forward and share information on 400 kV transmission lines and construction standards and modalities as the first step in implementing a $630 million electricity transmission and strategic road project funded by the US through Millennium Challenge Corporation under Nepal Compact.

Nepal and India have to reach agreement on the Butwal-Gorakhpur component of the transmission line project before the compact can become effective, which remains elusive despite multiple high level meetings and deliberations.

“We have issued a request for information as the first move to gather details about the technicalities of the project and requirements for its successful implementation in Nepal,” said Khadga Bahadur Bisht, executive director of Millennium Challenge Account-Nepal. “There is positive indication that the project will take off, but it is uncertain when Nepal and India will sign a project implementation agreement allowing us to move ahead with the construction.”

According to Bisht, Millennium Challenge Account-Nepal issued a request for information amid uncertainty while government officials deliberate and work to resolve pending issues on the Butwal-Gorakhpur component.

Government officials said that internal discussions might be going on between the Nepal Electricity Authority and India’s Central Electricity Authority, but nothing concrete had been decided on funding and implementation modalities.

A meeting of the Joint Steering Committee on Nepal-India Cooperation in Power Sector, slated for June in Bengaluru, is likely to be postponed owing to the recently concluded elections in India, Energy Ministry officials said.

“The plan was to resolve the issue in June, but we have received no word on when the meet will take place,” said Prabin Raj Aryal, spokesperson for the ministry and a member of the steering committee. “It is likely that the meeting will be put off as the funding and implementation modalities are yet to be finalised, and the government there is yet to take full shape.”

Last January, Nepali and Indian electricity authorities had decided to examine funding and implementation options for the Indian portion of the transmission line within three months, however, discussions are still going on.

The two sides had then agreed to evaluate options for the implementation of the line through a joint venture of Indian and Nepali entities with a 50:50 equity of grants and interest-free loans from the respective governments. An agreement on the proposed investment modality is yet to be reached.

US energy analysts aware of the developments say that India is concerned over ‘risk management’ and power utilisation issues which have delayed the agreement.

“There are questions over how the transmission line implemented by the Nepal Electricity Authority will be used in Nepal. Many of its actions will be under the jurisdiction of the newly formed regulatory commission, adding uncertainty to what will happen here,” said David Hurlbut, a senior analyst at the National Renewable Energy Laboratory’s Strategic Energy Analysis Centre, US in a recent interaction in Kathmandu. US Embassy officials are hopeful that the respective officials will overcome obstacles, meet the conditions and implement the project. “Officials have been travelling to Delhi, and there have been meetings on this,” said Andie De Arment, spokesperson for the US Embassy in Kathmandu. “What obstacles are there, they are actively working to solve those because the cross-border agreement is such a key component of MCC’s agreement and its requirement.”

Millennium Challenge Account-Nepal has also made plans to start the bidding process for the execution of 300 km of the 400 kV transmission line under the Electricity Transmission Project. “Millennium Challenge Account-Nepal intends to publish a Specific Procurement Notice and release the bidding document with the final Scope of Work and Employer’s Requirement by October-November 2019,” the organisation said.

The Compact, which will prevail over Nepal’s laws, includes two components—construction of about 300 km of 400 kV electricity transmission lines and three substations, and technical assistance for the power sector and technical assistance to improve the road maintenance regime and road maintenance work on about 300 km of the strategic road network.

There are five components in the transmission project—one segment starting from the northeast of Kathmandu at Lapsiphedi and extending to the west of Kathmandu near Ratmate, a second segment from Ratmate to the industrial town of Hetauda located south of Kathmandu, a third segment from Ratmate to Damauli in the west, a fourth segment from Damauli to Butwal in the southwest, and a fifth segment from Butwal to the Indian border which is part of the cross-border transmission line.

The Compact clauses also have a provision that the projects must be concluded within five years from the date of implementation or else the funds will go back to the US. Millennium Challenge Corporation has committed to provide $500 million for the projects and the remaining portion amounting to $130 will be contributed by the government.