The Millennium Challenge Account Nepal on Wednesday commemorated the initiation of construction of the 18-kilometre transmission line and the New Butwal Substation in Sunawal, Nawalparasi West.

The new infrastructure, part of the Millennium Challenge Corporation (MCC) Nepal Compact, will strengthen Nepal’s electricity grid and establish a major energy trade interconnection between Nepal and India, MCA Nepal said in a statement.

MCA-Nepal Executive Director Khadga Bahadur Bisht joined Minister for Finance Rameshore Prasad Khanal, the US Ambassador Dean Thompson, and MCC Resident Country Director Diane Franscisco at the construction initiation event.

Speaking at the event, Finance Minister Khanal said that the project reflects the government’s strong commitment to expanding clean energy access, enhancing regional power trade, and supporting our national goal of long-term economic growth.

“With the support of MCC and MCA-Nepal, we are turning agreements into action for the benefit of the country,” he said.

US Ambassador Thompson said that the US is proud to stand with Nepal as a committed partner in building a more reliable energy system. “Projects like this transmission line and substation will not only help keep the lights on for families and businesses, but also create opportunities for trade, growth, and prosperity across the region. Today’s event is a testament to what we can achieve together,” he said.

Also speaking, MCA-Nepal Executive Director Bisht said the event marks a new chapter in strengthening Nepal’s energy security. “The transmission line and substation will create new opportunities for power trade and bring long-term benefits to our citizens. MCA-Nepal is proud and committed to implementing this project in close partnership with the Government of Nepal and MCC,” he said.

The 18km transmission line will connect the 400kV New Butwal Substation to the Nepal-India border. Together, these projects represent nearly $50 million in investment and will help Nepal export clean hydropower to India under the landmark 2024 power trade agreement, which envisions 10,000 megawatts of electricity exports over the next decade.

The 18km transmission line and New Butwal Substation are vital to Nepal’s economic future because they will connect the country’s growing hydropower supply to regional markets, the statement said.

By strengthening the backbone of Nepal’s high voltage grid, the project will make electricity delivery more reliable for households and businesses, reduce power losses, and enable Nepal to sell power to other countries. These improvements will help lower the cost of doing business, attract new private investment, and generate revenues that can be reinvested in Nepal’s development priorities, reads the statement.