The Millenium Challenge Corporation Nepal Compact has come into force, following years of controversy that delayed the US aid’s implementation.

Finance Minister Prakash Sharan Mahat and Vice President of Compact Operations at the Millennium Challenge Corporation (MCC) Cameron Alford exchanged the letter on the Entry into Force (EIF) of the Nepal Compact on Wednesday, heralding the programme’s implementation.

The compact entails the construction of a 315-km 400kV transmission line and upgrade of a part of the East-West Highway. For this, the MCC is funding $500 million while the Nepal government will be contributing $197 million.

“The milestone [of EIF] follows an agreement between the Government of Nepal and the MCC that substantial progress on project preparation has been achieved,” said Millenium Challenge Account-Nepal (MCA-Nepal), a special purpose vehicle established to implement the MCC Compact Programme, in a statement on Wednesday.

“EIF is an important milestone for MCC Compact as it marks the fulfilment of necessary conditions and preparation to ensure successful completion of the Compact projects within a five-year timeline.”

MCA-Nepal officials said that the MCC wouldn’t invest a single penny in Nepal once the project’s five-year deadline is over, making it very challenging for the MCA-Nepal to complete the transmission and road projects in time, considering the delay such projects are facing in the country in the past several years.

“We are happy to mark this milestone to implement the Electricity Transmission Project—a designated National Pride Project—and the Road Maintenance Project, which will invest in Nepal’s strategic road network,” Finance Minister Mahat said at the event.

US Ambassador to Nepal Dean Thompson said the MCC-Nepal Compact is an exciting milestone in the 75-year long friendship between Nepal and the US.

Nepal government and the MCC had signed the compact on September 14, 2017. Earlier, the EIF of the MCC Compact was planned for June 30, 2020. But there was a prolonged delay in the compact’s ratification by Nepal’s parliament amid controversy over whether it is part of the Indo Pacific Strategy (IPS) and is above Nepal’s constitution.

After Parliament ratified the agreement in February last year, the two sides agreed to start the project’s implementation from late August this year.

“MCC is proud to work alongside our Nepali partners to invest in Nepal’s greatest asset, its people,” MCC VP Alford said.