Kathmandu, 19 June: The U.S. government has indicated that it will continue the Millennium Challenge Corporation (MCC) program. In a statement released on Wednesday, the U.S. Embassy in Nepal mentioned that the MCC Nepal program is expected to continue.
“In February 2025, the U.S. government decided to suspend foreign aid for 90 days. However, an exception was made specifically for the MCC Nepal Compact,” the statement said.
“Under this exemption, the MCC Nepal Compact has been granted the authority to continue with full implementation,” it further stated. “Even as the United States is reviewing its entire foreign aid program, the expectation remains that the ongoing MCC project in Nepal will continue.”
Earlier, in March, MCA Nepal had announced that the U.S. government had granted permission to proceed with certain activities under the MCC Compact. “The U.S. government has allowed some activities under the MCC Nepal Compact to move forward, but this approval does not indicate any specific outcome from the overall review,” MCC Nepal had stated in its press release.
Kathmandu, 19 June: Following an order by U.S. President Donald Trump, a decision by the MCC had placed Nepal’s project in uncertainty. On February 14 (Falgun 2), the MCC had formally notified the Government of Nepal about the suspension of payments. However, in March, MCC Nepal announced that the previously suspended project would resume.
MCA-Nepal is the implementing body for the MCC Compact in Nepal. According to the agreement signed between the Government of Nepal and the MCC on September 15, 2017 (Bhadra 29, 2074), the project officially began implementation on August 30, 2023 (Bhadra 13, 2080).
Under the initial agreement, the total project budget was set at USD 697 million (approximately NPR 92 billion), with the U.S. government contributing USD 500 million and the Government of Nepal covering the remaining USD 197 million. In December 2024 (Poush), the U.S. government announced an additional USD 50 million for the project.
Under the MCC Nepal Compact, several infrastructure projects are under construction, including:
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An 18-kilometer Butwal–Gorakhpur transmission line,
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A 400 kV New Butwal substation,
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A 400 kV New Damauli substation, and
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A 400 kV Ratamate substation.
According to MCA-Nepal, evaluation is currently underway for bids received for the construction of a 297 km transmission line and a 40 km road section from Dhankhola to Lamahi.
MCA-Nepal signed a contract worth USD 12.36 million with Transrail Lighting Limited on Bhadra 14, 2081 (August 30, 2024) for the construction of an 18 km segment of the Butwal–Gorakhpur cross-border transmission line within Nepal. MCA-Nepal has stated that preliminary works are underway, with a target to complete the line within 21 months.
So far, Transrail Lighting has been paid NPR 167.93 million for its work on the transmission line.
For the 400 kV New Damauli Substation under construction in Tanahun, detailed surveys, geotechnical investigations, and initial site preparation are ongoing. A contract was signed with India’s Techno Electric & Engineering Company on Shrawan 16, 2081 (August 1, 2024), and the company has been paid NPR 522.10 million to date.
Similarly, for the construction of the 400 kV Ratamate Substation in Nuwakot, a contract worth USD 51.6 million was signed with the same Indian company on Asar 1, 2081 (June 15, 2024), with a completion timeline of 39 months. MCA-Nepal reports that preparations for design and construction are in the final stages, and NPR 690.98 million has been paid so far.
For the 400 kV New Butwal Substation in Nawalparasi (Bardaghat Susta West), a contract was signed with Linxon India on Baisakh 27, 2081 (May 9, 2024), at a cost of USD 35.51 million, with a goal to complete the project within 39 months. MCA-Nepal states that NPR 472.77 million has already been disbursed to the contractor.
Regarding the construction of a 297 km transmission line, MCA-Nepal reissued a tender on Mangsir 12, 2080 (November 28, 2023), with a submission deadline of Falgun 7, 2081 (February 19, 2025). Nine companies submitted proposals for the construction of three transmission line sections, and evaluations are currently ongoing. The estimated cost of the 297 km line is USD 26.42 million.
Additionally, a tender was issued for the repair and maintenance of a 40 km road section from Dhankhola to Lamahi using Full Depth Reclamation (FDR) technology. Eleven bids were received, and the final selection process is underway.
