MCA-Nepal makes public expenditure and work progress as of November 2023

Amid concerns about ‘slow’ progress on the project implementation since the MCC’s Nepal Compact was ratified by Nepal’s legislature in February, 2021, the MCA-Nepal has said it has made sufficient progress.

NL Today

  • Read Time 4 min.

Kathmandu: The Millennium Challenge Account Nepal (MCA-Nepal), the Nepal government agency formed in order to manage and implement the USD 697 million infrastructure program—co-funded by the US Government’s Millennium Challenge Corporation (MCC)’s USD 500 million grant and Nepal government’s contribution of USD 197 million—has made public the details of expenses incurred by both Nepal and the US sides, as well as the status of works in progress.

Responding to Mahabir Paudyal’s request, MCA-Nepal has provided the details of the works accomplished and the expenditure incurred since the Compact was ratified by Nepal parliament in February, 2021. Paudyal, in his commentary on MCC projects and the progress thereof, had raised questions about the expenses and progress on the ground, arguing that the projects, that have attracted so many geopolitical attentions, should be executed and completed on time.

[See his commentary here: Why the ‘US-funded’ MCC projects in Nepal must break away from the cycles of delays and cost overruns]

MCC projects in Nepal comprise the Electricity Transmission Project, a national pride project, and the Road Maintenance Project, funded by the Millennium Challenge Corporation, the US government agency, and the government of Nepal.

According to MCA-Nepal, as of November 2023, total of US$ 48, 247, 662 has been spent for the projects by the MCC and the government of Nepal. While the MCC has spent US$ 24,452, 247, the government of Nepal has spent US$ 23,795,425.

Probably because many of the works on the ground are yet to take off, administrative expenses top the list of all other expenses incurred by the government of Nepal and the US. The US side has spent more than the Nepali side but the ratio of expenses appears to be almost equal.

TitlesExpenses from MCCExpenses from GoNTotal
Electricity Transmission ProjectUS$ 10,623,292US$ 17,203,989US$ 27,827,281
Road Maintenance ProjectUS$ 1,838,659US$ 570,848US$ 2,409,507
Monitoring and Evaluation
Program Administration ProjectUS$ 11,990,296US$ 6,020,578US$ 18,010,874
TOTALUS$ 24,452,247US$ 23,795,415US$ 48,247,662

Source: MCA Nepal, Kathmandu.

The MCA Nepal has also made public the activities it has accomplished, and/or is accomplishing, since the parliamentary ratification of the MCC grant, which had become highly controversial around 2021 and 2022 in Nepal.

According to MCA Nepal, post ratification, MCA-Nepal entered into the five-year implementation period of the MCC Nepal Compact program on 30 August 2023 with sufficient progress in site access. “Major achievements have centered around the initiation of land acquisition for the construction of transmission lines, the launch of bids pertaining to the supervision and construction of transmission lines and three substations along with preparatory works for road maintenance works,” MCA-Nepal said in response to the queries by Nepal Live Today’s Mahabir Paudyal.

MCA-Nepal has also provided the details regarding the progress under electricity transmission and road maintenance projects—the two projects to be accomplished under the funding of the MCC in Nepal and the contribution of Nepal government (MCC providing US$ 500 million and Nepal side contributing to US$ 197 million).

According to MCA-Nepal, MCA-Nepal has made notable progress in acquiring land to build tower pads for the transmission line as per the Land Acquisition Act (1977) in nine affected districts except in Kathmandu district. Public notices as per Section 9 of the Land Acquisition Act (1977) with full details of the land parcels to be acquired have been issued in all nine districts. “The notices were issued after MCA-Nepal submitted the Preliminary Action Reports on land acquisition at meetings chaired by Chief District Officers and Chairpersons of the Compensation Fixation Committee (CFC) of respective districts. At present, CFC sub-committees are doing the due diligence in the field to verify land parcels and prepare technical reports for compensation determination, MCA-Nepal said. “Following which a resettlement action plan will be disclosed in the community level.”

Similarly, after the completion of 76 consultations with 119 Community Forest User Groups and nine Leasehold Forest User Groups in nine project-affected districts, forest census works have been ongoing, informed MCA-Nepal. “All works related to forest census prior to forest clearance to enable site access in forest areas for the construction of transmission line towers will be completed by Dec 2023.”

Regarding procurement for construction of transmission lines and substations, MCA-Nepal said following the opening of financial proposal of submitted bids in September 2023, MCA-Nepal determined that the prices exceeded the available budget for this contract and rejected all submitted bids. “MCA-Nepal is now focusing on addressing the concerns expressed by the NEA and the Board and relaunching the tender as early possible,” the office said. “However, procurement of construction of three Substations is ongoing and will be completed in the coming months.”

Additionally, a two-year Livelihood Restoration Program is currently underway and benefitting project-affected people whose land has been acquired for the construction of the Ratmate substation in Nuwakot district. The program is providing 272 project affected people with a variety of vocational and skills-based training, including agriculture and livestock-related activities. “The program is an integral component of MCA-Nepal’s resettlement action plan, which is based on international standards and aims to ensure an equal or improved means of livelihood for any person who is physically and/or economically displaced by the project,” the MCA-Nepal said.

According to the MCA-Nepal, it will maintain and upgrade 40 km of road section from Dhankhola to Lamahi of the East-West highway in Dang district by introducing innovative, climate-smart and cost-effective sustainable technologies on road maintenance.

“MCA-Nepal recently convened a high-level stakeholder consultation meeting to build consensus on the final project design for the work to be completed on the Dang District Road segment. The project will be a demonstration of new technology for road rehabilitation, known as Full Depth Reclamation,” said MCA-Nepal. According to the office, the local stakeholders expressed support for the program design and their enthusiasm for the opportunity to have this work done in their community. “This is a great outcome for the Road Project which helps ensure that this component of the compact can proceed without delay,” the office said. “Additionally, engineers and technicians at the Department of Roads (DoR) are being trained in MCA-Nepal established state-of-the-art labs on use of new equipment for maintenance works.”

Related stories by Mahabir Paudyal on MCC’s Nepal Compact and MCC projects:

Why the ‘US-funded’ MCC projects in Nepal must break away from the cycles of delays and cost overruns

Clearing the air about America’s MCC Nepal Compact

What does the Maoist Center want in MCC’s Nepal Compact?

What will Nepal lose if the MCC is not given a parliamentary nod?

What will Nepali Congress do about the MCC Compact?