About a dozen officials at the Office of the Millennium Challenge Nepal (OMCN), a joint initiative of the Government of Nepal and the Millennium Challenge Corporation USA, are holding discussions on different projects to select at least two projects -- one each in energy and transport sector.
Speaking at a consultation meeting about the works of OMCN with media persons on Thursday, Krishna Gyawali, national coordinator of OMCN, said: "We are in a stage of project readiness. But we are cautious about implementation hurdles as we cannot extend the deadline on any ground," he added.
Nepal was selected for a MCC Compact Fund by the US government last year. Nepal will receive funding of US$ 350 million to 700 million for key projects. OMCN has prepared a preliminary list of projects to be implemented with the funding to stimulate economic growth for reducing poverty. The project is expected to come into implementation from early 2018 following a government to government agreement.
"Diagnosis of possible threats ranging from policy to legal as well as implementing institutions and governance is going on," Gyawali, who is a retired secretary, told Republica. He also said rigorous preparation and MCC's own fast track procurement process as well as an efficient institution to implement the project can complete the project in time.
Gyawali also said an institution called Millennium Challenge Account-Nepal (MCA-Nepal) will be formed after the bilateral agreement is signed to implement the projects.
Two transportation projects -- Kathmandu Tarai Fast Track Project and widening of Pakali- Kakarbhitta section (110 km) of Mahendra Highway and strengthening of Butwal-Pokhara section of Siddharth Highway -- have been selected in the preliminary round. The fast track project is sub-judice at the Supreme Court.
Chandra Shrestha, transport sector specialist at OMCN, said they can also seek funding from the World Bank to implement the fast track project. "It, however, depends on how early the verdict comes," he said, adding that they need to complete study within March next year.
Hitendra Dev Shakya, energy sector Specialist of OMCN, said they have been failing to select the project than can be completed within five years.
Not a single hydropower projects have been completed within the stipulated timeframe so far.
"We have proposed to build 400 kV double-circuit transmission lines -- one from Hetauda to Butwal via Damauli and another from Haledi to Naubise via Galchhi," added Shakya.
Required rate of return of MCC-funded projects should be a minimum of 10 percent. Officials say these projects are expected to give returns of 25 to 30 percent.
Besides, there also are other projects of maintenance and policy reforms.
A joint study as part of preparatory works for the project implementation by the experts of both Nepal and US had identified four binding constraints to economic growth in Nepal -- policy implementation uncertainty, inadequate supply of electricity, high cost of transport, and challenging industrial relations and outdated labor laws and regulations.
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