$500 Millennium Challenge Corporation grant

MCA-Nepal clarifies why parliamentary ratification is needed

Published On: December 23, 2019 10:15 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Dec 23: Millennium Challenge Account Nepal (MCA-Nepal) has clarified that a condition of ratification of the agreement for the grant of US$ 500 million from the Millennium Challenge Corporation, known as MCC Compact, by the Nepali parliament was a 'standard norm' used by the MCC to ensure that projects implemented under their support do not face any problems later due to other laws.

MCA-Nepal is an agency formed by the government to implement and manage programs financed by the MCC. 

The MCC Compact is a largest grant of $500 million from the US to Nepal to finance electricity transmission project and road maintenance project. In addition to the US grant, the government will chip in $130 million for implementation of the Compact. 

Under the compact, 312 km of 400 kV electricity transmission lines along with three substations will be built. Similarly, 99 kilometer roads along the East West Highway will be upgraded by using modern technology as part of the road maintenance project.

However, there were six conditions precedents, including ratification of the grant agreement by parliament, that must be achieved as necessary prerequisites before implementation of the compact.

As the government prepares to table the agreement for ratification in the ongoing session of parliament, some leaders within the ruling Nepal Communist Party (NCP) have criticized the MCC Compact, particularly the condition of the ratification.

Organizing a press conference to brief media about its activities on Sunday, MCA-Nepal's Executive Director Khadga Bahadur Bisht said that the ratification from parliament was needed to make sure that the agreement prevails over other laws of the country should there be any contradiction. 

“This condition is in line with the standard format of the MCC compacts. Seventeen other countries where compact is implemented also ratify the agreement,” said Bisht.

He, however, said that parliament has a right to debate or ask anything. “The elected representatives can ask anything. They can summon the account and ask about it,” he added.

Bisht also said that there was not any clause in the agreement that bars auditing of the projects under this compact by the Office of Auditor General. 

Designating Electricity Transmission Project as a national pride project, signing of the project implementation agreement, drafting of Electricity Regulatory Commission Act and forming the commission, agreement between Nepal and India for cross-border transmission line (Butwal-Gorakhpur) are other conditions that have already been met by Nepal. Now, parliamentary ratification and access to site are the two major remaining conditions that will be required to be met before the five-year clock for implementation of the multi-million dollar program starts ticking. The MCA-Nepal has already announced that the entry into force (EiF) for the implementation will begin from June 30 next year. 

This date is considered to be very important for Nepal because if the program enters into force, all projects must be completed within five years. MCA officials say that all compact-related works that are incomplete at the end of the five-year timeline will not be funded by MCC or unutilized funds will return to the US.

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