Cabinet okays Rs 51.38b US grant

Published On: August 4, 2017 10:01 AM NPT

KATHMANDU, Aug 3: The government has decided to accept a grant assistance of Rs 51.38 billion (US$ 500 million) from Millennium Challenge Corporation (MCC) for road maintenance and transmission line projects. 

The cabinet meeting of Thursday made the decision. 

MCC is an independent foreign aid agency of the US government. This is the first grant that the country is receiving through MCC. 

The assistance is for a five-year compact fund that has no time overrun in the project execution once the project kicks off.

Nepal was picked for the MCC grant in 2014. This is the largest ever single grant the country is receiving so far from a foreign country. 

The final signing of agreement is expected to happen by September.  
In addition to the US grant, the Government of Nepal contributes Rs about 12.88 billion to raise the total fund to Rs 64.26 billion (US$ 630 million). 

The cabinet approval will pave way for its voting by MCC’s board of directors and the US Congress for approval. 

The grant will be utilized for maintenance of roads of a cumulative length of 305 kilometers, which includes the Charali to Phidim, Dharan to Basantapur, Kadmaha (Lahan) to Gaighat, Hetauda to Bhimphedi, and Amiliya to Salyan Bazar sections. 
Likewise the transmission line projects include construction of total 300 kilometers of line -- from Hetauda to Butwal via Naubise and Damauli, and construction of three substations, one each at Naubise, Damauli and Butwal. 

The transmission line component also includes cross-border transmission line of Butwal-Gorakhpur, which aims at facilitating energy exchange with India.  

The MCC compact is a funding scheme that requires the recipient country to complete the projects ‘on time and on budget’. 

The signing of the MCC compact funding coincides with the celebration of 70 years of US-Nepal friendship. Nepal is the only recipient of the MCC compact assistance in South Asia.

Following Nepal’s strong performance on the MCC policy indicators like economic freedom, rule of law, and control of corruption, Nepal was selected as the eligible country to develop the compact in December 2014.

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