MCC CEO Albright arriving on SundayThe Millennium Challenge Corporation Compact that came into force on August 30 currently faces a land acquisition bottleneck as well as potential cost overruns.
At a time when the MCC-funded 315-km transmission line project is facing delays due to issues related to the selection of contractors, MCC Chief Executive Officer Alice Albright is arriving in Kathmandu on Sunday on a five-day visit.
The MCC Nepal Compact came into force on August 30, but is already facing hiccups. The issue related to land acquisition has put the officials in a quandary due to the uncertainty surrounding five technically-qualified bidders who quoted prices much higher than the estimated cost for constructing the transmission line.
Albright will be in Nepal to celebrate the US-Nepal bilateral partnership and the implementation of the MCC Nepal Compact, the US Embassy said in an email response to the Post. "The MCC CEO will meet senior officials from the government of Nepal to recognise their leadership in achieving the recent entry-into-force milestone, express MCC’s confidence in a successful partnership, and reaffirm MCC’s commitment to remain a steadfast partner in tackling the implementation challenges ahead and delivering the compact’s benefits to the people of Nepal."
Officials at the MCA-Nepal, the body responsible for implementing MCC-funded projects that include the transmission line and road upgrade, and other government agencies said the high quotations by bidders have put them in a difficult position on whether to select from among the existing bidders or issue a new tender by scrapping the current one.
The tender was invited by splitting the transmission line into several packages. According to MCA-Nepal, an estimated budget of $220.60 million covering all 3 lots was made public during the bidding process.
Albright, the daughter of former US Secretary of State Madeleine Albright, was nominated as MCC CEO by US President Joe Biden in August 2021. She is the highest-ranking MCC official to visit Nepal after the country accepted the $500 million grant.
During her stay in Kathmandu, Albright will be meeting with Prime Minister Pushpa Kamal Dahal, Finance Minister Prakash Sharan Mahat, Foreign Minister NP Saud, and Energy Minister Shakti Basnet, among others, and discuss the future of the projects and problems caused by construction delays. She plans to meet with some senior leaders of other political parties too, the details of which are yet to be available.
On September 25, the newly-appointed MCC residential director of Nepal, Dianel L Francisco paid a courtesy call on Finance Secretary Krishna Hari Pushkar where both sides discussed the timeline since the project countdown has already begun, according to the Ministry of Finance.
Earlier, several MCC officials had visited Nepal recently to mark the entry into force of the MCC Nepal Compact. MCC Vice President Cameron S Alford, too, visited Kathmandu.
Currently, the MCC is facing a burning issue of whether to negotiate the tendering process of the transmission that could overshoot the MCC’s budget or invite a fresh tender. Starting the process afresh will mean the project’s implementation time will be reduced. The compact implementation time spans precisely five years from the entry into force, after which the projects will be handed over to Nepal, according to MCA-Nepal.
"The issue of high-price bidding is yet to be resolved," said Dhaniram Sharma, spokesman for the Ministry of Finance. He said the MCA-Nepal is negotiating with the bidders. “As per the terms of reference, the responsibility of awarding the tender lies with the MCA-Nepal. If negotiations fail, they will go for a fresh tendering process,” Sharma added.
As per section 36 of the Public Procurement Act-2007, proceedings should be cancelled if the cost offered by the selected bidder is substantially more than the cost estimate and available budget. But the MCA-Nepal said that Nepal’s Public Procurement Act does not apply to MCC projects.
"Since senior MCC officials are also coming and the MCA-Nepal is also negotiating with the bidders, by the end of the visit, we will reach a conclusion where we want to ensure that project would not be delayed and the construction of the transmission line and land acquisition process will go hand in hand," another senior finance ministry official said.
The MCC will be injecting $500 million into the transmission line and improving a part of the East-West Highway while the government will be investing as much as $197 million in the project.
With the MCC already clarifying that there is a fixed budget approved by the US Congress to implement the MCC projects, the Nepal government will be responsible for any additional costs. MCA-Nepal officials said they have yet to decide on their next step.