Friday, July 21, 2017

MCC grant agreement expected to be signed by September

The Millennium Challenge Corporation (MCC) – an independent foreign aid agency of the US government working to reduce global poverty through economic development – has said that it is finalising the projects under its $500 million grant to Nepal. It expects that an agreement will be signed with Nepal for the five-year-long compact programme, by September this year.
In addition to the US grant, Nepal will contribute $130 million, making a total of $630 million, which will be invested into energy transmission and road transportation projects, according to senior officials of the MCC.
They said that they expect the US and Nepal governments to sign the agreement in September after finalising ‘some key next steps’ in the coming weeks that includes cabinet approval of the compact programme and then its voting by MCC’s board of directors and the US Congress for approval.
A visiting US MCC team led by regional deputy vice president for Europe, Asia, the Pacific and Latin America for the MCC Fatema Z Sumar today said that the MCC and the Nepal have agreed to invest in the Electricity Transmission Project (ETP) and the Road Maintenance Project (RMP). "MCC and the Nepal mutually agreed to focus on binding constraints for MCC compact investment, the inadequate supply of electricity and the high cost of transportation,” she said, adding that following the signing of the agreement, the MCC will finalise the preparatory works that is required in order for us to start the actual five-year compact.
The ETP project will include the component of construction of up to 300-km 400 Kv transmission lines that stretches from eastern to western Nepal, three hydropower substations and an additional cross-border transmission line, according to Sumar.
Similarly, the RMP projects will include components of road maintenance of cumulative 305-km and introducing smart and efficient technology to undertake robust road regime, she said. According to MCC, out of the $630 million of total funding, transportation project would be of around $55 million and the power sector of around $520 million while remaining funds will be spent on administrative activities.
Referring to works from the Nepal like finalising all issues related to land acquisition and regulatory reform including the passage of the bill on electricity regulatory commission, she said that the MCC will begin the ‘five-year clock’ to complete the project. "When the five-year clock starts, the country will have five years to fully start and complete all the infrastructure and construction within that time frame."
The MCC compact is the funding that requires the recipient country to complete the projects ‘on time and on budget’. The MCC does not go for the lowest cost while selecting the contractors, but go for the best value, and from start to completion of the projects, MCC will hold people accountable at each layer for delivering what they are supposed to do to complete 'on time and on budget.'
Nepal is the only recipient of the MCC compact assistance in South Asia while the funding is the largest grant from the US to Nepal. 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.
The signing of the MCC compact funding also coincides with the celebration of 70 years of US-Nepal friendship.


Transmission line projects
400kV Hetauda-Ratmate
400kV Ratmate-Damauli
400kV Damauli-Butwal
400kV Ratmate-Lapsiphedi
400kV Butwal-Gorakhpur (Nepal segment)
Power substations in Ratmate, Damauli and Butwal

Road maintenance projects
Tulsipur-Salyan (under consideration)

No comments: