Government approves EIA Report of electricity transmission project

The Ministry of Forest and Environment has approved the Environmental Impact Assessment (EIA) report of the Electricity Transmission Project (ETP) to be implemented by Millennium Challenge Account Nepal Development Board (MCA-Nepal) with the grant funding from the Millennium Challenge Corporation (MCC), USA, and co-funding from Nepal.

The EIA report, approved on April 29 April by the government with a ministerial level decision, is a major part of the project preparatory works now underway for the construction of transmission lines and substations under the ETP project, according to a press note issued by the MCA-Nepal office.

"The achievement is an important milestone to help meet one condition related to site access before the MCC Compact can enter into force,” executive director of MCA-Nepal Khadga Bahadur Bisht said, adding that the other important milestone will be ratification of the MCC. "The report has established the existing status of the physical, biological, socio-economic and cultural environment within the project’s footprint, and has suggested measures to mitigate the potential impacts."

The detailed EIA report, prepared according to existing laws in Nepal, is in compliance with Nepal's Environment Protection Act (EPA), 2019 and Environment Protection Rules (EPR), 2020.

The EIA used a robust methodology for data collection and analysis, and included a number of consultations and public hearings in all 30 municipalities, rural municipalities of 10 districts in the project’s footprint.

It has proposed measures to avoid, minimise or mitigate/manage adverse impacts and to optimise project benefits as per Nepali environmental laws and regulations, and international best practices.

As a requirement of the EPA (2019), the EIA includes a detail Environmental, Social, Health, and Safety Management Plan (ESHSMP) to ensure safety of workers and communities affected by the project during implementation. It also includes an Environmental Monitoring Plan, and specifies an environmental audit process to identify any non-compliance including corrective actions to ensure fulfillment of the commitments in the EIA report. Following the approval of the report, MCA-Nepal will now initiate a process to receive the approval for the use of national forest area and removal of trees and plants.

Nepal and the US MCC signed a Compact in September 2017 for undertaking two projects that the Government had identified to address major constraints to Nepal’s development.

ETP is one of the two projects under MCC, and Road Maintenance Project (RMP) is another projects. The transmission lines will pass through 30 municipalities, and rural municipalities in 10 districts. The project will also ensure affected local stakeholders benefit through partnership program and strengthen the power sector in Nepal.

Nepal signs programme implementation agreement with MCC

Nepal has signed a programme implementation agreement with the Millennium Challenge Corporation (MCC) representing the US Government, taking the implementation of the $500 million MCC Compact a step forward. The signing of the agreement comes in the wake of criticisms from some leaders of the ruling party over a plan to ratify the compact agreement in the parliament.
According to the Millennium Challenge Account Nepal (MCA-Nepal), finance minister Dr Yuba Raj Khatiwada and vice president of the Department of Compact Operations, MCC Anthony Welcher signed the agreement amid a ceremony at the Finance Ministry today.
The signing ceremony witnessed finance secretary Dr Rajan Khanal, joint secretary and head of International Economic Cooperation Coordination Division (IECCD) Shreekrishna Nepal, executive director at the Millennium Challenge Account-Nepal (MCA-Nepal) Khadga Bahadur Bisht and other MCC and MCA-Nepal representatives,
Under the compact programme, the US is providing Nepal the highest amount of grant, which will be spent for the implementation of Electricity Transmission Project (ETP) and Road Maintenance Project (RMP).
The programme implementation agreement is an important step toward implementing the Compact as it further specifies the terms for implementing the compact and its activities in Nepal including details of the implementation arrangements, fiscal accountability and disbursement and use of MCC funding, among other matters, according to the MCA-Nepal that is the entity established by the government to implement the MCC Compact programmes.
With its signing, Nepal has met one of the key conditions precedent to the June 30, 2020 entry into force (EiF) date after which the five-year clock to implementation of the Compact will start. The EiF date is crucial as the projects financed under the MCC compact must be completed within five years, according to the MCA-Nepal. “Other key conditions were the declaration of the ETP as a national pride project, passage of legislation related to the Electricity Regulatory Commission and formation of the commission and ratification of the compact agreement from the parliament.”
The condition for the ratification of the compact agreement from the parliament has drawn criticisms from some leaders and members from the ruling party Nepal Communist Party (NCP), raising concerns over the fate of the largest grant from the US.
Under the compact, the MCC will provide $500 million in grant while the government will chip in $130 million for the implementation of Electricity Transmission Project (ETP) and Road Maintenance Project (RMP). Altogether 318-km transmission lines of 400kV and three large-capacity substations will be built under the ETP, while the RMP is focused primarily on the maintenance of 300 km of strategic roads.
In September 2017, the US Government’s Millennium Challenge Corporation (MCC) signed the compact with Nepal. The compact aims to increase the availability and reliability of electricity, improve the quality of the roads network and facilitate power trade between Nepal and India, helping to spur investments and accelerate economic growth that will benefit all Nepalis, according to the MCC.

Government decides to accept Rs 52 billion grant assistance from US

The government has decided to accept the grant assistance of Rs 51.38 billion ($500 million) to be received from the US Millennium Challenge Corporation (MCC) for road maintenance and transmission line projects.
A cabinet meeting held at Office of the Prime Minister and Council of Ministers in Singha Durbar today has decided to accept the biggest foreign grant amount in its history, under the 'compact programme' pledged by the Millennium Challenge Corporation (MCC) of the US government.
The Millennium Challenge Corporation (MCC) is an independent US government agency working to reduce global poverty through economic development. This is the first grant that the country is receiving through MCC.
Under the compact programme, the MCC will invest up to Rs 51.38 billion ($500 million) via grant while the government will contribute an additional Rs 12.88 billion ($130 million) to raise the total fund to Rs 64.26 billion (US$ 630 million).
The cabinet approval will pave way for its voting by MCC’s board of directors and the US Congress for approval. "The final grant agreement is likely to be signed by September," according to MCC’s regional deputy vice president for Europe, Asia, the Pacific and Latin America Fatema Z Sumar, who visited Kathmandu last week to finalise the deal. Once the final deal is sealed, the government and the MCC will fix a date to roll out the projects as the MCC compact is a funding scheme that requires the recipient country to complete the projects ‘on time and on budget’.
"Once the deal is signed, the government will have to finalise all issues related to land acquisition, introduce regulatory reforms, including passage of the Electricity Regulatory Commission, and take other key steps that will be required to complete the projects in five-year period,” she said, adding that the project related to the energy sector is expected to have an impact on at least 72 per cent of the households currently connected to the grid, while maintenance works on around 300 km of road segments will benefit 205,000 households across the country. "The assistance is for a five-year compact fund that has no time overrun in the project execution once the project kicks off."
The compact proposal seeks to address these constraints by investing in an Electricity Transmission Project (ETP) and a Road Maintenance Project (RMP). ETP would transform power sector by expanding and strengthening the high voltage electricity transmission network to support new investments in generation and allow greater cross-border electricity trade. The RMP is expected to improve the road maintenance regime in Nepal and complement existing efforts to build new roads by other parties.
Around 300-km transmission line under ETP at a total cost of $400 million and 305-km road under RMP will be developed at a total cost of $52 million, according to the MCC. The grant will be utilised for maintenance of roads of a cumulative length of 305-km, which includes the Charali to Phidim, Dharan to Basantapur, Kadmaha (Lahan) to Gaighat, Hetauda to Bhimphedi, and Amiliya to Salyan Bazar sections.
Likewise, the transmission line projects include construction of total 300-km of line, from Hetauda to Butwal via Naubise and Damauli, and construction of three substations, one each at Naubise, Damauli and Butwal. The transmission line component also includes cross-border transmission line of Butwal-Gorakhpur, which aims at facilitating energy exchange with India.
The signing of the MCC compact funding coincides with the celebration of 70 years of US-Nepal friendship. Nepal is the only recipient of the MCC compact assistance in South Asia.
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 Office of the Millennium Challenge Nepal (OMCN) – a government office which coordinates development of the MCC programme – has finalised the projects in coordination with MCC that are going to be implemented under the MCC grant.
The MCC had selected Nepal for a smaller threshold programme in December of 2011. The MCC and the government of Nepal had analysed constraints to economic growth and jointly prepared a policy improvement programme based on the results. Given Nepal’s strong performance in its MCC policy indicator scorecard through 2014, MCC’s board of directors selected Nepal as being eligible to develop a compact, a larger grant-based investment.