MCA-Nepal starts construction of New Butwal Substation and 18-km Transmission Line

Millennium Challenge Account Nepal (MCA-Nepal) today commemorated the initiation of construction of the 18-kilometer (km) transmission line and the New Butwal Substation in Sunawal, Nawalparasi (Bardaghat Susta West). The new infrastructure, part of the Millennium Challenge Corporation (MCC) Nepal Compact, will strengthen Nepal’s electricity grid and establish a major energy trade interconnection between Nepal and India, according to MCA-Nepal.
MCA-Nepal Executive Director Khadga Bahadur Bisht joined Finance Minister Rameshore Prasad Khanal, the US Ambassador to Nepal Dean Thompson, and MCC Resident Country Director Diane Franscisco at the Construction Initiation event.
Khanal, on the occasion, said, “This project reflects the Government of Nepal’s strong commitment to expanding clean energy access, enhancing regional power trade, and supporting our national goal of long-term economic growth. With the support of MCC and MCA-Nepal, we are turning agreements into action for the benefit of the country."
"The United States is proud to stand with Nepal as a committed partner in building a more reliable energy system,” said the US Ambassador to Nepal Dean Thompson. “Projects like this transmission line and substation will not only help keep the lights on for families and businesses, but also create opportunities for trade, growth, and prosperity across the region. Today’s event is a testament to what we can achieve together.”
“Today marks a new chapter in strengthening Nepal’s energy security,” said Executive Director Bisht, on the occasion. “The transmission line and substation will create new opportunities for power trade and bring long-term benefits to our citizens," he said, adding that MCA-Nepal was proud and committed to implementing this project in close partnership with the Government of Nepal and MCC.
The 18-km Transmission Line will connect the 400kV New Butwal Substation to the Nepal-India border. Together, these projects represent nearly $50 million in investment and will help Nepal export clean hydropower to India under the landmark 2024 power trade agreement, which envisions 10,000 megawatts (MW) of electricity exports over the next decade.
The 18-km transmission line and New Butwal Substation are vital to Nepal’s economic future because they will connect the country’s growing hydropower supply to regional markets. By strengthening the backbone of Nepal’s high voltage grid, the project will make electricity delivery more reliable for households and businesses, reduce power losses, and enable Nepal to sell power to other countries. These improvements will help lower the cost of doing business, attract new private investment, and generate revenues that can be reinvested in Nepal’s development priorities, according to MCA-Nepal.
MCA-Nepal is the government entity established to implement the MCC Nepal Compact. The MCC Nepal Compact represents a total $747 million investment - $550 million in US grant funding and $197 million from the government to expand Nepal’s electricity transmission network, reduce transport costs, and create new opportunities for private sector growth. MCA-Nepal works in close partnership with MCC, the government and Nepali communities to ensure the compact delivers lasting benefits to the people of Nepal.