The MCC board in December 2014 had selected Nepal under the Compact Programme. It is the US government’s large-scale investment programme, under which Nepal can get US grant aid of $60 -$600 million in five years. Nepal was selected for the scheme after the country passed the scorecard-based criteria for the last four years consistently and continues to demonstrate clear progress in institutionalising democratic progress, according to the MCC.

The scorecard is based on three criteria—economic freedom, investment in people and just rule. Nepal has been under the MCC’s Threshold Programme, small-scale investment scheme, since 2011.

MCC Chief Executive Officer Dana J Hyde, who is currently on Nepal visit to lay foundation for the US funding, said at a press meet on Thursday it would take around a year to make necessary preparations, including creating core teams, once each of the MCC and the Nepal government, before signing an agreement.

“Once the agreement is signed, the programme will run for five years,” she said, adding the investment will be made in sectors identified as key areas for growth and poverty alleviation through the economic analysis of the MCC team. “Energy and transport have been identified as such areas.”

Hyde said the size of the aid to Nepal would depend on “what work that goes on over the next year” when the groundwork for the US funding would be prepared. “The average size of the investment under the MCC Compact Programme has been in the range of $350 million to $400 million as far as experiences of the last 10 years are taken into account.”

The US funding will be channelised through a board consisting of core teams of the MCC and the Nepal government, private sector and civil society.

She said the MCC has already selected a country team leader and specialists having expertise in the areas of energy, infrastructure and social and gender issues. She said the MCC core team would be on the ground in Nepal in a few months.

To implement the projects, a structure named “MCC Account”, which would have a board and staff, would be formed. A Nepali core team, drawn from ministries including finance, energy, infrastructure and finance, would work with staff and oversee the project.

Hyde said the financing would encourage the private sector from across the world to make investment in Nepal. She stressed on the need for reforms in the areas of policy, governance and institutions not only for the MCC investment, but also to encourage private sector investment.

“The investment from MCC and donors won’t be enough to meet the investment need in Nepal’s infrastructure sector,” she said, adding, the private sector investment is a must for the purpose.”