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Nepal and USA sign MCC grant worth USD500 million [free access]

September 18, 2017

The Nepal government has signed a five-year agreement with United States’ (US) Millennium Challenge Corporation (MCC) to mobilise a grant worth USD500 million for the development of energy and road transport sectors, which are considered major constraints to the economic growth in Nepal.


The grant aims to improve the availability of electricity and control transportation costs in Nepal. In line with this, the MCC will invest USD500 million as a grant, while Nepal government will have to contribute USD130 million in MCC investment projects in the aforementioned two sectors.


MCC will invest the bulk amount of the grant in an electricity transmission project (ETP), while only a limited grant will be invested in a road maintenance project (RMP).


Under the ETP, MCC will construct up to 300 km of high voltage power lines for Nepal’s east-west high voltage transmission backbone, which will evacuate electricity equivalent to five times the current installed generating capacity of Nepal. In addition, it will also include the construction of a second cross-border transmission line between Butwal and Gorakhpur to facilitate electricity trade with India, and construction of substations to help Nepal consolidate electricity generated from a number of hydro projects under construction.