Kathmandu-Projects under the Millennium Challenge Corporation in Nepal can be extended by one year if required, following a legal provision endorsed in the United States.

The provision, approved by both chambers of the US Congress and signed into law by Donald Trump last November, allows an additional one-year extension for MCC compact projects in four countries, including Nepal, subject to resource availability.

According to the U.S. Embassy in Kathmandu Spokesperson Frank Sellin, the Ministry of Finance was directly informed by the MCC of the possibility for negotiating a potential extension prior to the public announcement.

Under the law, Nepal’s MCC compact, which is set to end on August 30, 2028, could be extended by one year if necessary.

The programme came into effect on August 30, 2023. The extension provision also applies to MCC projects in Indonesia, Kosovo and Senegal. The law requires that the relevant congressional committee be informed before any extension is granted.

In Nepal, the MCC is funding electricity transmission lines and road upgrade projects. The current timeline leaves more than two years for completion.

Nepal signed the MCC compact in 2017, which was later ratified by the federal parliament on February 27, 2022. The agreement includes a US grant of about 600 million dollars, with an additional 197 million dollars from the Government of Nepal. So far, 550 million dollars from the US has been approved.

The government formed the Millennium Challenge Account Nepal to implement the projects. The compact focuses on expanding electricity transmission infrastructure and upgrading road networks to support economic growth and regional energy trade.

The project includes construction of a 400 kV transmission line from Ratmate in Nuwakot to Butwal and onward to Gorakhpur, along with the upgrading of five road sections.

The MCC Nepal Compact had received an exemption to continue operations after a temporary suspension earlier in 2025. While the US initiated a 90-day pause on aid in February 2025, it approved an exception for the MCC Nepal project.

‘MCC Compact was never halted in 2025 or at any time since it entered into force,’Sellin added.