27 August, 2024
MCC Nepal Compact
Programme for Infrastructure
Strengthening
The transformation of Nepal from a country that once imported electricity to the one that now has started exporting it, is evident. The increased investments from the state and the private sector in generation projects have made this progressive change possible. The selling of electricity, after fulfilling domestic demand, has been the vision of Nepal for many years. Today, India receives the green energy from Nepal, and in future Bangladesh can be included too. The export of electricity will thus contribute towards a sustainable and much required export revenue for Nepal.
To realise Nepal’s aspiration of exporting power, the development of transmission infrastructure should be propotionate with the increase in the generation capacity. The Transmission Development Master Plan prepared as early as 1995 and subsequent plans and the latest plan of 2017 of the Government of Nepal (GoN) has envisaged crossborder connection at several locations with both our neighbouring countries—China and India for the same reason.
Inadequate infrastructure has been a major obstacle in meeting overall development goals of Nepal, and it is equally true for power transmission line. Significant investments have been made in power generation projects but due to the absence of power transmission infrastructure not all the generated electricity have reached potential markets. Clearly, transmission lines are a vital link to ensure evacuation of power from the 3,000 MW (under construction) and additional 3,000 MW (at various stages of development) projects to load centres. The investments in power generation will be at risk if transmission lines are not constructed on time and will negatively impact the country’s economy.
In this context, Millennium Challenge Account Nepal Development Board (MCA-Nepal) and a Government of Nepal (GoN) agency, is building a segment of the line as envisaged in the Transmission System Development Plan of Nepal. Around 315 km electricity transmission line from Lapsiphedi, Kathmandu via Ratmate to New Butwal, Nawalparasi at the border with India, and Ratmate to New Hetauda will be constructed under the MCC Nepal Compact Fund, a USD 630 million programme, co-funded with a grant of USD 500 million from the Millennium Challenge Corporation (MCC) and USD 130 million as contribution from the Government of Nepal (GoN). The programme focuses on implementing two projects namely the Electricity Transmission Project (ETP) and the Road Maintenance Project.
(RMP). The programme aims to increase the availability and reliability of electricity, maintain road quality, and facilitate Nepal’s power trade with the regional countries and help spur investments and accelerate economic growth in Nepal. The ETP will construct up to 315 km of 400 kV double circuit Quad Moose overhead electricity transmission line and three new substations at Ratmate, New Damauli, and New Butwal. This line will be able to carry more than 3000MW of generated power. In addition to the transmission line and substations, the project also has components of power sector technical assistance to NEA (Nepal Engineers Association) and Electricity regulatory commission, and a partnership programme to share project benefits with local communities. The RMP will contribute to the maintenance of up to 77 km road segment of EastWest Highway and includes technical assistance to the Department of Road and Roads Board Nepal. The proposed 400 kV transmission line to be built by MCA-Nepal is a part of Nepal’s transmission backbone. The initial section between Inaruwa to Hetauda is now under construction by NEA and NEA has plans for another line going west from New-Butwal substation. MCA-Nepal’s transmission line will connect the Inaruwa-Hetauda section of the line at the New-Hetauda substation with the New Butwal substation via Ratmate and New Damauli substations, which are the major collection hubs for generated power in the nearby river basins. Ratmate substation will be further connected to Lapsiphedi substation, North-East of Kathmandu valley to collect power from Upper Tamakoshi and Bhotekoshi river basins, to complete a loop. The line intends to collect electricity generated from hydropower projects in various river corridors in the project vicinity and deliver it primarily to load centres within Nepal through various substations planned or under construction. The construction of the transmission line, in addition to enhancing the evacuation capacity of Nepal’s power system, will also improve the reliability and the quality of the supply, and at the same time facilitate the export of excess power. MCC Compacts around the world allot enough time to the project preparatory phase so that all conditions for successful project delivery are met prior to the implementation activities. Accordingly, the preparatory and implementation phases of the MCC Nepal Compact are two distinct stages in the execution of the Compact project. Since the projects must be completed within an agreed timeframe of five years with no provisions for time extension or cost increase, MCC has adopted a two-phased implementation model, i.e., the preparatory phase and implementation phase. The preparatory works ensure readiness for the implementation phase.
The programme, the largest grant assistance provided by the US Government to Nepal during its 75 years long bilateral relationship, has many unique features. Like other development assistance from other bilateral and multilateral development partners, the grant was received upon the GoN’s request to invest in infrastructure projects as per the need identified by the Nepal government. The contractors for the construction of the projects will be selected competitively based on free and fair international bidding process in line with international practices. The procurement process follows a very transparent approach, and the key documents are made public. The books of account are subject to audit by the Office of the Auditor General, Government of Nepal, in addition to MCC audit.
The successful implementation of the programme will be a game-changer and present a model in infrastructure project management for Nepal in terms of timely completion, following stringent environment and social safeguard practices. In addition to enhancing the power evacuation capacity of Nepal’s transmission system, new technology such as Full Depth Reclamation and Super-pave will also be introduced for road maintenance in Nepal.
The project will use climate-smart, sustainable technology to recycle asphalt and create a safer transportation network that is easier to maintain. The Department of Roads is a key partner in MCANepal’s project to maintain the quality of roads and help Government of Nepal address its long-term maintenance needs.
A snapshot of both projects is given in the infographics below.
Note: This article is from Nepal Infrastructure Summit 2022 Souvenir by Khadga Bahadur Bista.
