As Nepal is in dire need of infrastructure projects to help accelerate the development activities and revive the pandemic-hit economy, the country’s private sector has reiterated its call for endorsing the Millennium Challenge Corporation (MCC)'s Nepal Compact Programme. Various business associations, including Nepal-USA Chamber of Commerce and Industry (NUSACCI), have called on Prime Minister Sher Bahadur Deuba to create an alliance of lawmakers to approve the US grant programme as soon as possible. In 2017, the Government of Nepal and MCC, a US government agency, had inked an agreement to implement a US$ 630 million programme to construct large transmission lines, including Butwal-Gorakhpur cross-border transmission facility, and refurbish some strategic roads. As per the deal, of the total programme amount, the MCC will have to contribute $500 million to the programme while Nepal is supposed to bear the remaining $130 million. The MCC programme includes two major components: Electricity Transmission Project and Road Maintenance Project.

Under the Electricity Transmission Project, 312-km of 400 kV electricity transmission lines and three substations will be constructed. Besides, it will also provide technical support for the country’s power sector. The Road Maintenance Project aims to consolidate the existing practices in the maintenance of strategic road network and provide technical assistance to the Department of Roads (DoR) and Roads Board Nepal. Therefore, the grant aid programme is expected to be helpful for the development of important infrastructures that Nepal requires for the export of power in the long-run. With immense hydropower potentials, the country has accorded high priority to generating hydroelectricity for meeting its growing demand and exporting it. Since Nepal lacks better transmission lines and other power infrastructures, Nepal Electricity Authority (NEA) has also emphasised the need to implement bigger infrastructure projects like the MCC Nepal Compact. With billions of rupees being invested in power projects in Nepal currently and in the absence of adequate power transmission infrastructure, the generated energy will be wasted.

But the MCC programme has failed to move ahead due to the persisting uncertainty over its endorsement by the parliament as the major political parties have been unable to forge a consensus. The MCC agreement was tabled in the Federal Parliament in 2019. It was scheduled to come into implementation from July 30, 2020. The private sector has stated that the country has been reeling from a huge scarcity of resources to meet the mega infrastructure requirements. Issuing a joint statement on Sunday, the umbrella organisations of the business community have suggested that the country should not backtrack from a signed international pact as the nation may lose her image and credibility in the international arena. Such a situation may also shy away potential foreign investors and donors.

Although the MCC officials have already clarified the concerns raised by the Ministry of Finance, the US grant aid programme has still been in controversy because some political parties and civil society organisations said that that the agreement undermined the sovereignty of the country and it was a part of the debatable Indo-Pacific Strategy of the USA. Meanwhile, having received the joint statement, Prime Minister Deuba said that it was a crucial development project for Nepal’s economy. According to him, the government was making all-out efforts to reach an understanding among the political parties to ratify it by the parliament.