Officials have claimed significant achievements in the past year regarding projects undertaken by the Millennium Challenge Corporation Nepal Compact.

Speaking with the media representatives on Wednesday to mark one year of the MCC Compact's entry into force, US Ambassador to Nepal Dean Thompson, MCC Resident Coordinator Diane L Francisco, and Khadga Bahadur Bisht, executive director of the MCA-Nepal expressed satisfaction at the achievements made last year and hoped that the project would be completed within the stipulated time.

Hailing the progress made last year and even before MCC projects came into force, Ambassador Thompson stated that the US continued to support Nepal since 1947 in various sectors and areas.

Pointing to the wide range of US support from roads to hydropower, he said: “We are here in Nepal, preparing for the journey of the next century.” Nepal’s Parliament ratified the MCC compact in February 2022, following an agreement in 2017 between the government and the Millennium Challenge Corporation.

The MCC Compact signing opened the way for the United States to invest $500 million in Nepal’s power and transport infrastructure. With Kathmandu’s contribution, a 400kV transmission line will be built, a part of the East-West Highway will be improved using the MCC grant, and as much as $197 million from the Nepal government.

Elaborating on the MCC’s core objectives, which range from job creation to improving Nepal’s economy, the US ambassador stated that frequent government changes in Kathmandu have not significantly impacted the advancement of the MCC projects.

Though several initiatives were taken before MCC entered into force on August 30 last year, according to Bisht, the MCA-Nepal has completed the procurement of some major contracts and made significant progress in preparing the sites for contractors' access.

In the past year, according to the MCA Nepal, it awarded and signed contracts worth approximately $126 million for constructing three 400 kV GIS substations at three locations in Nawalparasi West, Nuwakot, and Tanahun from May-July 2024. The New Damauli Substation and the Ratmate Substation will each have a capacity of 1,000 MVA, making the two the largest substations in the country.

Similarly, a two-year $1 million livelihood restoration programme for 270 project-affected people by Ratmate Substation concluded on 30 May.

“MCA-Nepal had earlier acquired around 400 Ropanis of land for the substation. The contractor for the 18 km cross-border transmission line segment has been selected and will be awarded within August 2024,” said Bisht. The MCA-Nepal will re-launch procurement for the 297 km transmission line later this year.

For the transmission line, the chief district officer-led Compensation Fixation Committees (CFC) have been formed to fix land acquisition rates for 856 tower pads across nine out of ten districts. Rates for the lands to be acquired in Dhading, Makwanpur and Nawalparasi West have been fixed as of July 2024.

“MCA-Nepal has also completed the opening of bank accounts and provided financial literacy training for all persons receiving compensation which are necessary precursors to making payments in these three districts. Similarly, the CFCs in six districts will be fixing the land rates for respective districts,” said Bisht.

This is a year of achievement, said the US envoy. “We are confident that the MCC projects will be completed within the stipulated time.”

He expressed the embassy’s commitment to completing the task before the deadline expires.

Since tenders were awarded on a lump sum basis, there is little chance of having variation in the project and the cost, said Bisht.

Another project under the MCC is on road maintenance, whose initial environmental examination (IEE) report for works on the 40 km segment of the road from Dhan Khola to Lamahi on the East-West Highway has been approved.

The MCA-Nepal plans to launch the procurement of road maintenance works using Full Depth Reclamation (FDR) technology at the earliest this year, said the MCA-Nepal.

Bisht claimed that despite Nepal’s bad experience with land acquisition and compensation distribution, the MCA-Nepal has not faced any hiccups.

The land acquisition process is on track, said Bisht. “And as per the government’s rule, we are planting new trees on 400 hectares of land.”

The goal for the second year is to sign the contract for the remaining 297 km of transmission line and go ahead building both transmission lines and substations, fix land rates in all affected districts and distribute compensation. Under the Power Sector Technical Assistance, the MCA-Nepal signed a contract worth $1.2 million on July 22 to provide advisory support in the economic/financial, technical, legal and policy/institutional regulatory work of the Electricity Regulatory Commission.

Francisco, the MCC resident country director, said: “This transmission line backbone we are building will enable more efficient electricity movement across the grid, contributing to increased access to electricity for all Nepalis and the economic opportunity for cross-border and regional trade of clean energy.

“We understand that our goals are ambitious and that infrastructure projects have challenges… And I am confident that together we can overcome all challenges, optimise our resources, and deliver on all Compact priorities.”