Kathmandu — The Millennium Challenge Account Nepal Development Committee (MCA Nepal) has welcomed the U.S. government’s decision to temporarily continue the program being implemented in Nepal under the Millennium Challenge Corporation (MCC). MCA Nepal is the implementing agency of the MCC project being operated with U.S. assistance.
“MCA Nepal has welcomed the U.S. government’s decision to allow the continuation of the implementation of the MCA Nepal Compact under a special exemption, in the context of the suspension imposed on U.S. foreign assistance,” stated the press release issued by MCA Nepal on Wednesday.
MCA Nepal has said that it is working closely with the MCC to implement compact activities, including the completion of procurement processes related to the construction of 297 km of electricity transmission lines and road maintenance. “MCA Nepal is continuing work on three substations and the construction of an 18 km cross-border transmission line that had already progressed prior to the review of foreign assistance,” the statement said.
Although MCA Nepal issued a statement claiming that a decision had been made to continue the MCC project being implemented in Nepal, the U.S. government has not made any such decision since the second week of June (June 18). On June 18 itself, the U.S. Embassy in Nepal had issued a notice indicating a positive signal that the MCC Nepal would continue.
“In February 2025, the U.S. government decided to suspend foreign aid for 90 days. As an exception to this decision, a special exemption was granted for the MCC Nepal Compact. According to this exemption, the MCC Nepal Compact has been granted the right to be fully implemented and continued,” the embassy statement said. “Even as the U.S. is reviewing its entire foreign aid program, it is expected that the MCC project already underway in Nepal will continue.”
MCA Nepal has stated that the project will continue, based on the U.S. Embassy’s statement and recent disbursements made by the MCC. “MCA Nepal’s management has concluded that the project will proceed, taking into account the U.S. Embassy’s statement issued on June 18 and the payments made in the meantime,” a source said. “Accordingly, the project issued a new procurement notice on Wednesday for road maintenance.”
Finance Ministry spokesperson Shyam Prasad Bhandari said that they have not received any formal communication regarding the operation of MCA Nepal. “The U.S. government seems to have requested details about the project, and the project appears to have submitted the information, based on which some payments have also been made,” he said. “Just as we were earlier informed of the project’s suspension via email, nothing formal has been sent this time. During meetings, U.S. Embassy officials have only verbally stated that the project will continue.”
Finance Ministry spokesperson Shyam Prasad Bhandari said that they have not received any formal information regarding the operation of MCA Nepal. “The U.S. government apparently requested details about the project’s status, and the project provided the information, based on which some payments have also been made,” he said. “Just as we were earlier informed of the project’s suspension via email, nothing formal has been sent this time. During meetings, U.S. Embassy officials have also verbally stated that the project will continue.” Bhandari added that the payment process allows for some funds to be directly transferred from the U.S. to the project’s dollar account. Accordingly, some payments have been made during this period.
Earlier in Chaitra, MCA Nepal had stated that the U.S. government had granted permission to proceed with projects under the MCC. “The U.S. government has allowed certain activities under the MCC Nepal Compact to move forward; however, this permission does not indicate any definite outcome from the ongoing review,” said the statement issued by MCA Nepal at that time.
Following the order of U.S. President Donald Trump, the step taken by the MCC had put Nepal’s project in uncertainty. On February 14 , MCC had informed the Government of Nepal through correspondence about the suspension of payments. However, in Chaitra, MCC Nepal had stated that the previously suspended project would be restarted. Now, the project has welcomed the U.S. government’s decision to allow its continuation.
MCA Nepal is a program under the MCC. According to the agreement between the Government of Nepal and MCC on 14 September 2017, project implementation began on 30 August 2023. The initial agreement stated that the project budget was 697 million dollars (approximately 9.2 billion NPR), with the U.S. government contributing 500 million dollars and the Government of Nepal bearing 197 million dollars.
On December/January , the U.S. government announced an additional $50 million for the project. Under MCA Nepal, an 18-kilometer Butwal–Gorakhpur transmission line, a new 400 kV Butwal substation, a new 400 kV Damauli substation, and a 400 kV Ratamate substation are under construction. According to MCA Nepal, a 297 km transmission line and a 40 km contract from Dhangadhi to Lamahi have been tendered, and the submitted proposals are currently being evaluated.
MCA Nepal signed a contract on 30 August 2024 with Transrail Lighting Limited for the construction of the 18 km transmission line in Nepal under the Butwal–Gorakhpur cross-border transmission line project for USD 1,236,000. MCA Nepal has stated that preliminary work is underway with the goal of completing the transmission line within 21 months.
MCA Nepal stated that so far it has paid Transrail Lighting Company NPR 16,793,2962 for the Butwal–Gorakhpur transmission line. Detailed surveys, geotechnical investigations, and preliminary site construction work are underway for the new 400 kV Damauli substation under construction in Tanahun.
A contract for the construction of the new Damauli substation was signed with India’s Techno Electric and Engineering Company on Saun 16, 2081 (early August 2024). The contracted company has been paid NPR 522,153,54 so far.
A contract was signed with India’s Techno Electric and Engineering Company Limited on15 June 2024 to construct the 400 kV Ratamate substation in Nuwakot. The contract, valued at 51.6 million USD, aims to complete the substation within 39 months. MCA Nepal stated that final preparations before the design and construction of the substation are underway, and so far, the company has been paid NPR 699,732,00.
A contract was signed with Linkson India on 9 May 2024) for the construction of the new 400 kV Butwal substation in Nawalparasi (Bardaghat Susta West). The substation, targeted to be completed within 39 months, was contracted for USD 35,510,000.
MCA Nepal has stated that it has already paid NPR 472,770,576 to the contracted company. On 27 November 2024, MCA Nepal reissued a tender for the construction of a 297 km electricity transmission line. The deadline to submit proposals for this tender was On 19 February 2025). Nine companies submitted bids for the construction of three transmission lines, and the proposals are currently being evaluated.
The estimated cost for constructing the 297-kilometer transmission line is 26,420,000 USD. A tender has been called for the maintenance of a 40-kilometer road section from Dhangadhi to Lamahi using Full Depth Reclamation (FDR) technology. Eleven bids were received for this, and the final selection process is underway.
Source: Kantipur
