Kathmandu - The United States has temporarily halted the Millennium Challenge Corporation (MCC) grant.

According to the Ministry of Finance, the MCC has been put on hold for 90 days. If the U.S. does not resume the grant after this period, delays in the construction of critical transmission lines in Nepal are inevitable.

To address this uncertainty, the Ministry of Energy is considering assigning the Nepal Electricity Authority (NEA) to oversee the project and managing the required financial resources through government channels.

As per the agreement between the Government of Nepal and MCC on September 14, 2017 (Bhadra 29, 2074 BS), the construction of a 400 kV transmission line from Ratmate in Nuwakot to Butwal and then to Gorakhpur, India, had begun.

The MCC project also included the upgrading of five major roads. With funding suspended, these projects now face significant setbacks.

Under the agreement, either party can terminate the contract with a 90-day notice. The U.S. has exercised this provision by sending a suspension letter.

Although the MCC grant was approved by Nepal’s parliament after prolonged political debates, uncertainty now looms over its future. Initially, the project was set to receive a $500 million grant from MCC, with an additional $130 million investment from the Government of Nepal. Recently, MCC had also committed an extra Rs 6.8 billion in funding.

The project aimed to construct a 400 kV double-circuit, 315-kilometer-long transmission line, including substations in Lapsiphedi (Kathmandu) and Ratmate (Nuwakot). The transmission line was planned to run through Makwanpur, Dhading, Tanahun, Palpa, Chitwan, and Nawalparasi before reaching Maheshpur on the Nepal-India border.

As part of the MCC Nepal Compact program, MCA-Nepal had also signed an agreement with the Indian company Transrail Lighting Limited to build an 18-kilometer cross-border transmission line.