Kathmandu, 2 Jul: The U.S. aid agency Millennium Challenge Corporation (MCC) has decided to continue the implementation of the Nepal Compact.
Millennium Challenge Account – Nepal (MCA-Nepal) announced this in a press release on Wednesday. The statement reads, “MCA-Nepal welcomes the U.S. government’s decision to grant a special exemption allowing the continued implementation of the MCC Nepal Compact in the context of the suspension on U.S. foreign assistance.”
However, MCA-Nepal has not disclosed the exact date on which this decision was made. Earlier, in March, while the United States was still reviewing its foreign aid programs, MCC had sent a letter to Nepal granting permission to carry out some essential procurement and operational activities related to office functions. Based on that, MCC has continued the implementation of ongoing projects in Nepal.
Previously, the U.S. Embassy in Nepal had also issued a statement expressing its intention to continue supporting the Nepal Compact.
MCA-Nepal, the body implementing the MCC Compact, has so far awarded contracts for three 400 kV electricity substations and an 18-kilometer 400 kV transmission line. MCA-Nepal stated that it is working closely with the Millennium Challenge Corporation (MCC) to complete the procurement processes for the construction of the remaining 297 km of transmission lines, road maintenance, and other Compact-related activities.
MCA-Nepal also noted that it has continued work on the three substations and the 18-kilometer cross-border transmission line project, which had already progressed before the U.S. foreign aid review process began.
“MCA-Nepal is committed to completing these infrastructure projects that will have a significant impact on the development of Nepal’s energy and transportation sectors. We express our sincere gratitude for MCC’s continued partnership in the implementation of this Compact,” the organization stated.
According to a knowledgeable government source, there has been informal information suggesting that MCC has decided to continue its assistance in five countries, including Nepal, though no official communication has been received yet.
Initially, the Compact had been agreed with a provision for MCC to provide a grant of USD 500 million to Nepal.
However, due to rising construction costs in the transmission line component, MCC’s board decided on January 2, 2025, to provide an additional USD 50 million in support. MCC has also notified the U.S. Congress regarding this decision.
The recent decision by the U.S. government has not made it clear whether the total assistance will remain at the initial USD 500 million or include the additional USD 50 million, bringing it to USD 550 million. “However, the disbursement of the initial USD 500 million is confirmed,” the government source told Onlinekhabar.
