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By Our Reporter

The MCC Nepal Compact, a mission under the MCC grants has neither built the transmission line nor repaired the road within one and a half years of the inception of the projects.

The projects introduced in Nepal under the American aid project Millennium Challenge Corporation (MCC) Nepal Compact have not yet been able to gain momentum.

The grant agreement for this project was inked through a joint effort of the Nepali Congress and communist parties of Nepal, was tabled at the House of Representatives on Falgun 8, 2078 BS, and was passed 7 days later amid opposition and obstruction from the political parties.

A section of the Maoist Center had strongly protested on the streets, whereas, another section at the HoR stood in favor of the proposal while endorsing the proposal from the Parliament. Finally, the MCC proposal was endorsed by the House with the majority. Although the main opposition UML raised slogans, it had already played the role of endorsing the MCC from the House.

On Magh 5, 2068, the process for the MCC threshold was selected during the time when Dr Baburam Bhattarai was the prime minister in Nepal, however, it took 12 years for its implementation.

Even after three years of endorsement from the parliament and going to the implementation stage, the projects under the Millennium Challenge Corporation have not been able to gain momentum.

The projects under the MCC were enforced on Bhadau 13, 2080 BS. At that time, Cameron Elford, the vice president for operations at the MCC headquarters in the US, visited Kathmandu.

According to the agreement, ‘entry into force’ means the construction of the projects must be completed within 5 years of implementation. Already, 16 months have passed since the counting of the five years for the completion of the projects, MCA Nepal is still stuck in the initial phase of work.

This project is engaged in land acquisition and the acquisition of related projects. MCA Nepal also called for bidding to advance the power line and road projects. However, they had been cancelled and confused. It seems that MCA Nepal is engaged in the process of re-opening the contract and proceeding with the procurement process.

MCA Nepal had announced that contract deals have been endorsed for the construction of two 400 kV GIS substations including the new Butwal Substation in Nawalparasi, Bardghat Susta West district and Ratmate Substation in Nuwakot. An agreement was signed for the construction of that project on Baisakh 27 and Jesth 32.

On Asoj 12, 2080, a contract was signed for engineering consulting services.

An agreement was reached on Asar 31 last year to provide full-time consultancy to the Electricity Regulatory Commission as part of the technical assistance in the energy sector of the electricity transmission project.

In 9 out of 10 districts affected by the project, the land acquisition process has not been completed. Land acquisition is done by the compensation determination committee formed under the chairmanship of the chief district officer of the concerned district. Out of the nine, the land compensation rate has been determined only in Dhading, Makwanpur Nawalparasi, and Bardghat Susta West.

In Chitwan, Palpa, Nawalparasi, Bardghat Susta East, Nuwakot, Tanhu and Sindhupalchok, the determination of compensation has not been finalized yet. Tree counting has been completed in nine districts out of 10 affected districts.

The environmental test report has been prepared to upgrade the 40 km road from Dhankhola to Lamhi on the East-West Highway towards the road repair project. Although it was said that climate-friendly technology called ‘Full Depth Reclamation’ would be used for the first time in Nepal while upgrading the road section, it did not work. There has also been no physical progress on the 36-kilometer road section from Narayangadh to Mugling in Chitwan.

Under the MCC, there was an agreement to provide a total grant of 550 million dollars by the US government to Nepal. The total cost of the program was 747 million dollars including 197 million dollars being invested by the Nepal Government. Due to the increased cost, it has already turned into a project worth 96 billion dollars.

According to the MCA Compact Nepal, a budget provision has been made to invest $ 690 million i.e. 96.52 billion 54 lakh 17 thousand 393 rupees from both countries till December 2024. The budget for the power line is $ 5,824,20,387, while the budget for the road is $ 549,55,848. MCA has allocated $ 77,22,392 towards the follow-up.

On the other hand, a budget of 9.9 million 1 thousand 373 million has been allocated for program management and administration.

In which so far only 40 million 62 million 49 thousand 11 dollars have been spent towards the power line. This means that it has been spent only on the distribution of compensation along with compensation. Infrastructure construction work has not picked up speed.

On the other hand, only 30 million 12 million 6 thousand 618 dollars have been spent on road construction. Like the construction of power lines, road maintenance work has not yet progressed.

Only 71.7 million 1 thousand 350 dollars have been spent so far in the total budget of 697 million dollars. In the next 3 and a half years, MCA Nepal has to spend 625 million 98 thousand 650 dollars to prepare the infrastructure. Looking at the expenditure so far, it has barely reached 10 percent.

The United States is investing in the construction of power transmission projects and the repair of roads. At an investment of US $ 54.9 million, more than 130 km of the strategic road network is set to be repaired. On the other hand, Nepal aims to improve the quality of its strategic road network through the provision of matching funds.

The total investment for the power transmission project was $ 582.4 million. The project aims to increase domestic electricity consumption by improving the transmission system. The plan is said to build infrastructure up to the Indian border in Rupandehi, passing close to the border with China. The plan was supposed to facilitate the construction of a cross-border transmission line from Butwal to Gorakhpur in India. The project involves the construction of a 400 kV transmission line with a double circuit length of about 315 km with 9 kV quad-circuit towers.

Sub-station

It was said that three new 400 kV indoor gas-insulated sub-stations (GIS) will be constructed under the power transmission project. There are plans to build the Ratmate Sub-station in Belkotgarhi Municipality of Nuwakot, New Damauli Sub-station in Tanahun, New Butwal Sub-station in Bhumhi in Nawalparasi West.

The under-construction transmission line is also ready to be connected to Nepal Electricity Authority’s Sub-station at Lapsiphedi in Kathmandu and New Hetauda in Makwanpur. Among the projects under MCC, three sub-stations and an 18 km transmission line from New Butwal to the Indian border have also to be contracted.

The bidding for 297 km transmission line has been called again. Bidding for the 77 km road maintenance project from Bhaluwang to Shivkhola in Dang is going on.

MCA Nepal had asked the bidders to clarify the bid documents during the program attended by about 85 representatives of 53 different companies for the livelihood of the physically and economically displaced due to the project. In such a situation, it had invited bids for the implementation of the Livelihood Restoration Scheme on Mangsir 28, with a deadline to submit a proposal by Magh 3.

The project was further complicated by the cancellation of the contract process for the first phase of construction of the transmission line under MCC. After the cancellation of the first phase agreements, new tenders have been published seeking new biddings.

All the biddings during the first phase were cancelled after the contractor companies submitted proposals worth $  145.38 million, nearly 66 percent more than the estimated cost, on Asoj 26, 2080. MCA Nepal had proposed to cancel the process after the lowest offer in the tender was 66 percent higher than the estimated cost. The contract was cancelled following approval by the MCC headquarters.

At that time, the 315 km long transmission line project was divided into three parts. According to the bid opened on Jesth 8 2080, six companies proposed to build a transmission line. Only five companies have been successful. India’s Kalpataru Power Transmission Limited, Transrail Lighting Limited, Tata Projects Limited, KEC International Limited, Larsen & Toubro Limited were technically successful.

The first lot of the transmission line consists of the Lapsifedi-Ratmatae-New Hetounda section. MCA-Nepal had estimated the cost of constructing the transmission line of this lot at $ 764.64 million. Transrail Lighting Limited, the lowest-paid company competing in the lot, offered $ 131.5 million. That cost was $ 55.67 million, or 72 percent more than the estimated cost.

In the second lot, the cost of the Ratamate-New Damauli section was estimated at $ 64.83 million. The lowest bidder was Tata Projects Limited. Tata had proposed to build this section at a cost of 10 crore 54 lakh 25 thousand rupees. The lowest offer was 45.71 million more than the MCA’s estimate. The cost was 62.5%  higher than the expected cost.

Under the third lot, New Damauli-New Butwal transmission line reaching the border of India was included. The MCA Nepal had estimated the cost of constructing the transmission line of this section at 7 crore 92 lakh 82 thousand rupees. However, the lowest bidder, Tata Projects, offered $ 129.21 million. That amount was 62.73 percent, or $49.7 million, more than the cost estimate.

MCA Nepal had estimated a cost of US $ 226 million to build the double circuit transmission line to be built. However, the bidder company’s offer for the lowest price was $ 36.59 billion, which was 66 percent higher than the cost estimate, after which the bid was cancelled. After 7 months of the cancellation of all these contracts, a new process has been started and the contract has been put in place, but there is a doubt that the project can be completed in the stipulated 5 years if the work is not started yet.

The work under the MCC project has to be completed within five years. Even after a year and a half since the implementation, there is zero material progress, so the possibility of completing all the work in the next 4 and a half years is almost impossible.

Initially, MCA Nepal had tendered for the construction of the transmission line design, supply, delivery, installation, testing, and commissioning model. The selected companies were required to design and build the transmission line. According to this precondition, 856 towers should be acquired. The transmission line should take possession of the corridor of 46 meters.

There is a provision to get permission from the Council of Ministers for cutting trees for the transmission line route and under the tower, 122 community, government and various other forest trees.

MCA Nepal is facing more trouble as Nepal’s Public Procurement Act and Regulations do not apply to its projects.

MCA Nepal has focused on reducing the time taken in the procurement process and making the most of the resources during the implementation to ensure the timely completion of the project works.

The MCC project has seen a physical progress of only 6.6%  till the last financial year 2080-81. According to the Ministry of Finance, Rs 6.11 billion has been spent so far. According to the details provided by MCA Nepal last time, the expenditure statement up to December 2024 has increased to about 9 percent.

MCA Nepal has not disclosed the expenditure details of the fiscal year 2080/81. According to the available information, MCA Nepal has provided the details of the expenditure of  Rs 717 lakh and Rs 1,350 till December 2024. The situation this year, like the expenditure statement of the last financial year 2080-81, is also disappointing. For the development of infrastructure under MCA (Nepal), Rs 10.84 billion was allocated in the last fiscal year 2080-2081.

MCA Nepal had spent only about $ 2.48 billion two thousand 20 rupees only out of this, 40 crore 71 lakh 9 thousand 59 rupees were spent from the Nepal Government’s fund. MCA-Nepal had reached the stage of budget dedication after spending only a few percent of the annual appropriated budget. According to the provisions of the Financial Procedure and Fiscal Responsibility Act and Rules, there is a provision to surrender in case the budget allocated for the plan and program cannot be spent.

On the other hand, under the MCA-Nepal formed for the implementation of the project, there is a condition that if the project related to power transmission line and road construction is not completed within the specified time, Nepal will not receive funds through MCC.

The use of force against opposition is also being tolerated during the implementation of MCC. Local residents have been agitating in the Kathmandu Valley for three years. In Lapsiphedi of Shankharapur Municipality-3, the armed police are constantly agitating along with the local Tamang community for the construction of a sub-station. However, the government is trying to suppress their movement. Even the mainstream media is silent about the movement of this community. There have been several clashes when armed police intervened in the local movement. Locals have repeatedly resisted the armed police team that has recently arrived to provide security for the construction of the substation. The Tamakoshi Hydropower Project is under construction to bring electricity to Kathmandu and connect the MCC transmission line there. Locals are accusing the MCC of trying to destroy the local Tamang settlement by placing the sub-station under the MCC project in the middle of the village. There is still a daily demonstration shouting  ‘Go Back America’. But the big media doesn’t make it their issue. The MCC’s transmission line is planned to be constructed from Ratamate in Nuwakot to the Nepal-India border in Rupandehi via Lapsiphedi. Another transmission line is planned to be taken to Hetauda. Here, armed policemen are injured by frequent clashes, while local residents are also being caught and released.

Kulman Ghising, managing director of Nepal Electricity Authority, has also rejected the demand of the Tamang community for the construction of the transmission line and sub-station in Lapsiphedi forcefully. To some extent, due to the dispute, a temporary base of armed police has been kept after the dispute at the substation.

Until a year ago, five towers could not be built on the Kathmandu side. There is a demand to move the station despite the fact that the locals were given compensation in the year 2074. Now the government is constructing sub-stations by deploying armed police under the pressure of the United States, as the Tamang community has refused to negotiate.

The power transmission line and substation to be built under MCA-Nepal will require 1,471 hectares of land. Out of which 20.27 hectares of land have been acquired in Belkotgadhi Municipality of Nuwakot. The affected people have received a compensation of 1 billion 468 million 68 thousand 500 rupees. The Nepal Electricity Authority has offered land for the construction of the new Damauli substation and the new Butwal substation. One hundred and four hectares of land is required in 10 districts to build transmission line towers. The task is still to be accomplished.

One of the conditions stipulated in the MCC compact to implement the project is still incomplete. The prerequisites for the distribution and acquisition of compensation for transmission lines and road expansion, ensuring land use rights within the forest area and access to the project area have not been fulfilled.

The amount of additional support MCC announced an additional $ 6.8 billion on grant last week. The MCC Board of Directors has informed that the grant amount has been increased for the projects under the MCC worth Rs 96 billion implemented since the year 2080. The Nepal government has added $ 19.7 million (Rs 26.17 billion) to the US government’s $ 500 million (Rs 69.43 billion) grant for the implementation of the project.

The initial cost of the project was estimated at US $ 630 million. Later, it was revised to Rs 69. 70.992 billion. The U.S. assistance program MCC says Nepal is a new chapter in the Compact America-Nepal Partnership. However, there are doubts that this partnership can be reached in the stipulated time according to the agreement between the two countries. If the physical progress is not cut by 10 percent for one and a half years, the chances of getting all the projects ready in the next four and a half years look bleak.

The U.S. State Department’s Unified Strategy on Nepal stated a year ago, “Due to internal politics and foreign disinformation campaigns with ulterior motives, the approval of the MCC agreement came in February 2022 after a long delay.” “The United States will now focus on its implementation”.

But in contrast to the US, the MCC project is progressing at a tortoise’s pace in Nepal. Despite the absence of any obstacles in Nepal, the MCC project has made it difficult to produce results on the scheduled date. Although US officials have said that the goal is to improve the quality of roads in Nepal and facilitate electricity trade between Nepal and India, the Nepali people have viewed it with suspicion. Reports show that the Nepali people have not been able to get the expected benefits from the MCC project, which has been promoted to irritate the northern neighbor in the geopolitical game.

MCA has not been able to meet its targets in the last one and a half years. In such a situation, an official of MCA Nepal said that they hope to meet the targets set for the coming year. According to him, it is time to move forward by persuading the communities that will be affected by the land acquisition of this project in Nepal.

“We have successfully solved the problem. We are planning to go ahead with the process in a fair manner by fixing a date,” the official said, adding, “The MCA compact requires large-scale land acquisition.” “It is a complex process. It requires coordination with landowners, local authorities and community groups in 10 districts.”

According to him, although the land acquisition process may be challenging, success has been achieved at the substation overnight. Now the officials are confident that the remaining land acquisition work will be able to speed up and effectively address the problems of the transmission line.

MCA Nepal said that it has tried to move forward by taking care of the land acquisition process as it is linked to the rehabilitation action plan and the livelihood of the locals. MCA Nepal has also claimed that attention has been paid to the rehabilitation program of the affected. MCA Nepal is ready to ensure proper compensation to the affected people while carrying out projects related to land acquisition and rehabilitation. The official said that work is underway to acquire 104 hectares of land in 10 districts for the construction of the entire transmission line. MCA Nepal says that it is going to secure access to the construction site at all locations to advance the construction process without delay in the case where one and a half years have been wasted.

MCA Nepal has also said that a public notice has been issued with full details of the land to be acquired in 9 districts in accordance with Section 9 of the Land Acquisition Act. The CFC sub-committee, which was formed to recommend the rate of compensation for the land to be acquired, has also conducted on-the-spot verification visits in all nine districts. Initial work is underway to acquire land in the last temple in the tenth district of Kathmandu.

The official said that the forest census has been completed for all tower locations in nine out of ten districts within one and a half years. The process is underway in Kathmandu. But MCA Nepal is facing continuous opposition in Lapsefedi. According to MCA Nepal, it is also preparing to make changes in the design of access roads and towers in 2025. However, the construction of the tower is yet to begin.