The government has decided to table the compact signed with Millennium Challenge Corporation, an independent US government agency, in Parliament for ratification. Endorsement of the compact by the House will pave the way for the implementation of a $630 million US government-funded project to build a 300-km-long 400 kV transmission line and upgrade 305 km of roads.

A Cabinet meeting held on February 8 decided to have the agreement ratified by Parliament to satisfy the condition specified by the corporation to make it effective. As per the accord signed with Millennium Challenge Corporation, it should prevail over Nepal’s domestic laws. And for the compact to prevail over the domestic laws of the country, it should be ratified by Parliament, according to the Nepal Treaty Act.

Apart from getting the compact ratified, the government needs to meet a number of other conditions for it to enter into the force. It has to obtain the Indian government’s consent for the financial and operational terms for the construction of the 400 kV New Butwal Gorakhpur Cross-Border Transmission Line being developed with the grant. The government also needs to obtain land, site access and forest clearance for the schemes.

According to Khadga Bahadur Bisht, executive director of Millennium Challenge Account Nepal, the government-formed entity to execute the projects being developed with the grant, they are currently conducting a study to finalise the alignment of the transmission line.

“Once the ongoing study is completed, we will be able to determine how much land and forest area needs to be acquired for the project,” said Bisht. The Nepal Electricity Authority, the state-owned power utility, is holding talks with the Central Electricity Authority of India to finalise the financial and operation modalities of the cross-border transmission line.

Millennium Challenge Corporation selected Nepal for its compact programme in December 2014. Nepal was selected for the programme ‘in recognition of the country’s efforts to establish rule of

law and democratic institutions, and its strong performance on Millennium Challenge Corporation’s policy scorecard’.

Since then, Millennium Challenge Corporation has agreed to support two broad projects in Nepal—the Electricity Transmission Project and the Road Maintenance Project—as energy shortages and inferior transport network are two binding constraints for Nepal’s rapid economic growth.

Out of the total investment of $630 million, Millennium Challenge Corporation will contribute $500 million and the Nepal government will put up the remaining $130 million. The bulk of the investment being made in Nepal will be spent on the development of 300 km of transmission lines and three power substations.

The Electricity Transmi-ssion Project being executed by Millennium Challenge Account Nepal includes the construction of approximately 300 km of double-circuit 400 kV transmission lines in central Nepal along with three substations at Ratmate, Damauli and Butwal.

Another large chunk of money will be used to maintain around 300 km of roads. The rest of the money will be spent on activities like monitoring and evaluating the projects being implemented, hiring procurement and fiscal agents, and other administrative expenses.