Prolonged delays and cost overruns are the major setbacks bedeviling Nepal’s infrastructure projects–including the national pride ones. These delayed projects have rendered our national dreams unrealized, our national expectations unmet. The Melamchi Drinking Water Project and the Kathmandu-Tarai Expressway may be cited as but only two of many such examples.
The Melamchi Drinking Water Project, initiated in 1998 under the Melamchi Water Supply Development Board (MWSDB), was to be completed by 2006. Yet, multiple deadline extensions later, the project remains incomplete. The project, meant to be completed within a 17 billion rupees budget when it was started in 2001, has already cost the nation 60 billion rupees (and counting)–much of it in loans. Yet, whether the residents of Kathmandu will be able to use the water from this project is still uncertain.
The Fast track road that started in 2017 and was to be completed in 2021, has seen several deadline extensions–now pushed to 2027–and the cost estimated at 175 billion rupees has already been projected to rise to a whopping 214 billion rupees. We don’t know how many more deadline extensions the project will need and how much more money will have to be forked out for it.
One of the reasons the Millennium Challenge Corporation (MCC)’s Nepal Compact was taken very positively–and welcomed by a large section of political, economic, business and media community in Nepal–was because the projects (hereafter referred to as MCC projects) to be jointly funded by the MCC–the US government international development agency–and the government of Nepal would be absolutely free from the ills described above: The frustrating delays, extensions of deadlines, cost overruns and outcomes with no or little guarantee of quality and sustainability.
In that respect, MCC projects actually stand out as the first initiative in Nepal with a meticulously planned timeline, promising completion within five years. Timely completion of the US$697 million projects–with MCC putting in US$ 500 million and Nepal government contributing US$ 197–is not only expected to break the cycle of delays but also set a new subplot in Nepal’s infrastructure development narrative: Projects can be started on time in Nepal, completed on time within initially estimated budget in Nepal and with financing modality of 60 percent grant and 40 percent national contribution in Nepal.
In other words, if realized on time as committed, the MCC Nepal Compact, with its monumental budget, signifies a departure from the ‘norm’ in Nepal’s project implementation landscape. While other national pride projects are mired in delays, the MCC projects have an ambitious timeline, promising completion within five years.
As Nepal aspires to shift to developing country status and aims to become a middle-income nation by 2030, the role of MCC projects in developing a high-powered cross-border transmission line will lay robust infrastructure to support its growing energy generation capacity. By 2030, Nepal aims to generate 15000 MW of electricity. The MCC projects can be instrumental in enabling the country to export the surplus power.
The officials representing MCC in Kathmandu speak of this importance with emphasis. Diane L Francisco, Resident Country Director, Nepal of MCC, emphasizes the multidimensional nature of the MCC Nepal Compact and the need for a whole-of-government approach. “MCC provides grants to governments to support large-scale complex development projects around the world. The MCC Nepal Compact is multidimensional and cuts across various sectors of Nepali life and will take a whole-of-government approach to be successful,” she said.
Khadga Bahadur Bisht, Executive Director of MCA Nepal, reiterates the commitment to addressing challenges and ensuring the timely completion of the project. Bisht acknowledged the urgency to implement the Electricity Transmission Project and said that MCA Nepal is working closely with relevant bodies to address technical, social accountability, and regulatory components while exploring avenues for expediting the procurement timeline. “MCA-Nepal remains committed to ensuring the transmission lines are built on time, within budget, and in accordance with MCA-Nepal and MCC’s environmental and social standards,” he said.
Caveats and concerns
Notwithstanding the iteration and reiteration of commitment from both sides, the truth is that the MCC projects are not moving forward at a fast pace needed to accomplish the tasks within the next five years. Nearly two years after parliamentary ratification and entry into force, the MCA Nepal’s report card has mostly the field visits, consultations and surveys as progress to show. As things stand, the land acquisition process is underway but not complete. Compensation process is underway but not complete. At some places affected people are demanding more money in compensation, which could further raise the project costs. Around four billion rupees has been spent so far, more of it from the Nepali side, according to a report.
MCA Nepal invited bids for transmission line projects but the process became controversial after the bidders quoted exorbitantly high prices. All bids were rejected due to bid prices being substantially 66 percent higher than the original estimate. As is the case, re-bidding is going to take a substantial amount of time, delaying the project completion.
So the concerns have already started to be raised that the projects might not be completed within the five years time frame and within the said budget. But the potential delays and cost overruns will have ramifications adversely affecting Nepal’s capacity and its ability to implement projects with foreign grants. Fingers, however, will also be pointed towards the US side for failing to live up to its promises.
Look back at your own words
MCC projects may be the first ‘most debated’ foreign aid projects in Nepal’s modern history. Until it was ratified, it nearly vertically split the political parties and civil society. It almost became a source of irritant in Nepal’s relations with the US. There were so many geopolitical interests, blame games and war of words around it. Those of the political leaders, including the members of media and civil society who stood in favor of the projects were labeled as Ameriki dalaals (American stooges).
If Nepali government and political actors and MCC officials look back to what they promised during the time of parliamentary ratification and the days that followed they will probably see what would be at stake if the projects are not completed within the set deadline and at the costs of $697 million.
To assure that the MCC projects have no geopolitical, strategic and military strings attached, there were exchanges of letters between the two sides. To appease the concerns that it could be used as a geopolitical tool, an interpretive declaration was issued. One famous leader went to the extent of saying that if MCC projects would not be implemented within the set time frame, or if any day they posed any threat to the national interests of Nepal, his head could be tonsured, his citizenship and property confiscated and he be banished from the Kathmandu valley.
One concern among political parties in Nepal was that the US side might not agree to accept the interpretive declaration. The US side has also addressed this concern by reiterating that it accepts the interpretive declaration.
Work work work
Good thing is the government actors (including the members of those political parties which were most averse to MCC compact ratification) are advocating for all-out support for timely implementation of by far the biggest US aid project in Nepal.
What is keeping the Nepali side from speeding up the work? Is it because of the lack of cooperation between MCA Nepal and line ministries? Or is there something else to it too?
It is worthwhile to recall the most recent comments of Nepal’s executive head as well as the finance minister. Speaking at an event held in October this year to mark the launch of implementation for the MCC Nepal Compact hosted by MCA-Nepal, both Prime Minister Pushpa Kamal Dahal (who at one time appeared to be most averse to MCC) and Finance Minister Prakash Sharan Mahat (who was the most ardent supporter of the MCC projects) promised that they would leave no stone unturned to complete the projects within the stipulated time frame. The PM said the government will extend all support for project implementation. “The government of Nepal will do its best to ensure timely implementation of the MCC project,” he said.
Finance Minister Mahat said that the government will remove all hurdles to project implementation. “We will extend full support from our side for its implementation,” said Mahat. “Government is committed to removing obstacles in its implementation. MCC is for Nepal and Nepali people.”
But wishes are not horses.
The objectives laid down by the government of Nepal and the MCC can be achieved only when two sides concentrate on nothing else but work. And work.
But as the work is not moving forward at a speed and in a way that people can feel, we also need to raise some crucial questions to the stakeholders: What is keeping the Nepali side (for that matter the MCA Nepal and also the Ministry of Finance) from speeding up the land acquisition work? Do they have real genuine issues or is there a game of commission going on (it is a common knowledge in Nepal that many Nepali leaders, including the ministers, decide what to do with the projects not based on the necessity on the ground but based on how much they get in commission money)? Or does it have to do with weaknesses on the part of MCA Nepal? Does MCA Nepal enjoy enough autonomy from MCC? What are points of concrete progress on the ground? Have the all-out efforts been made to speed up the work from both sides?
The MCA Nepal could bring out a report card to inform the people what is underway, what has been accomplished and what is yet to be done.
The success of MCC projects will create a new story in Nepal’s infrastructure landscape and will be a matter of celebration for both sides. Meanwhile, the countdown has started. As this piece goes to the press, MCC and MCA Nepal have four years, eight months and nine days–not full five years.
Here are other related stories by Mahabir Paudyal on MCC’s Nepal Compact and MCC projects: