August 19, 2017 08:36 AM NPT
Agreement for the largest ever grant to Nepal expected to be signed in Sept
KATHMANDU, Aug 18: A meeting of the board of directors of the Millennium Challenge Corporation (MCC) has approved the grant of $500 million to Nepal as part of its compact program. The decision of the MCC to provide Nepal the $500 million grant is subject to congressional review in the United States.
The government of Nepal, through a cabinet meeting, has already decided to accept the largest grant from the US. The grant agreement is expected to be signed by both governments in September.
According to MCC officials, Nepal will have to complete the project ‘on time and on budget’. The project will be of five-year duration.
The grant will finance two components -- Electricity Transmission Project and Road Maintenance Project -- aiming to promote economic growth and help people come out of poverty, creating more stable, secure countries with new business opportunities. The Nepal Government will contribute an additional $130 million for the project.
Following Nepal’s strong performance on the MCC policy indicators like economic freedom, rule of law, and control of corruption, Nepal was selected as an eligible country to develop the compact in December 2014.
“This compact with Nepal focuses on the power and transportation sectors to improve regional connectivity, spur private investment, drive growth, and reduce poverty,” said Jonathan Nash, acting chief executive officer of MCC, in a statement issued by the US Embassy in Nepal.
According to Nash, the contribution of Nepal Government is the single largest up-front country contribution in MCC’s history which ‘will enable its investment to have an even greater impact.’ This is the first compact to be approved by MCC’s board of directors under the Trump Administration.
The Electricity Transmission Project includes the construction of approximately 300 km of high voltage power lines, equivalent to one-third the length of Nepal, the addition to a second cross-border transmission line to facilitate electricity trade with India and activities to improve sector governance to promote private investment. Similarly, the road maintenance project is designed to improve the maintenance regime in Nepal, which will complement existing efforts by others to build new roads.