Now that operations are permitted, the program must move forward more quickly. The infrastructure it supports can shape Nepal’s economic future, and any delays would only hinder opportunities for growth, regional trade, and industrial development.
The Millennium Challenge Corporation (MCC) Nepal Compact will move forward as planned, thanks to a waiver from the U.S. Secretary of State in February 2025. This decision ensures that the program will be fully implemented as the United States reviews its foreign aid policy. The U.S. Embassy in Kathmandu stated that both the MCC and the U.S. Mission are working closely with relevant partners to support steady progress in Nepal.
The Embassy emphasized that the United States is committed to helping Nepal achieve its economic goals and to strengthening the long-standing partnership between the two nations. The MCC Nepal Compact, negotiated in 2017 and approved in 2022, includes a $500 million investment from the U.S. and a $197 million contribution from Nepal. It has significant plans. It aims to build 315 kilometers of 400 kV transmission lines, three substations, and key road improvements using modern technologies such as asphalt recycling. These projects are designed to improve energy access, enhance road quality, and position Nepal as a stronger power exporter. Now that operations are permitted, the program must move forward more quickly. The infrastructure it supports can shape Nepal’s economic future, and any delays would only hinder opportunities for growth, regional trade, and industrial development.
Some people, particularly from communist parties, argue that the pact carries hidden geopolitical concerns and undermines national sovereignty. Political opposition has slowed the compact’s progress from the beginning. Yet these concerns are not supported by the wording of the pact, which makes no reference to military cooperation. Both the Nepali and American governments have stated openly that there are no military dimensions to the agreement. The opposition is anchored more in domestic political narratives than in facts. Temporary bans during the Trump administration created additional obstacles. A presidential order issued in January 2025 halted foreign assistance payments for 90 days, disrupting projects worldwide. In Nepal’s case, that freeze delayed funding designated for essential transmission and road infrastructure.
The current exception removes this barrier, allowing procurement and field activities to restart. Moving forward, the focus must be on speed and delivery. Bureaucratic delays, political concerns, or disagreements between agencies can no longer hold up implementation. Once completed, the power sector project will stabilize domestic demand and help Nepal become a regional electricity provider.
The road stretch will reduce travel time and transport costs, improve supply networks, and strengthen trade corridors. These projects can lay a solid foundation for broader economic transformation. Nepal qualified for the MCC Compact due to its record of democratic governance and willingness to embrace change. Those same principles must guide its current approach to implementation. The window to act is now. While diplomatic ties with neighboring countries must remain strong, developing this U.S.-backed initiative reflects a broader intent to diversify alliances. This is not about taking sides, but about building the kind of infrastructure that future generations will depend on. The decision by Washington to allow this arrangement to proceed reflects the priority placed on Nepal’s development. Matching that pledge with prompt implementation is Nepal’s responsibility.
Source: Republica
