Khadga Bahadur Bisht | Executive Director, MCA Nepal
As the dust of the controversy over the parliamentary ratification of the MCC Nepal Compact has settled, the Millenium Challange Account (MCA) Nepal has started the preparatory works for the development of the 315-kilometer 400 kV transmission line. The USD 400 million project will stretch from Lapsiphedi in Kathmandu to Ratmate in Nuwakot, to Butwal via Damauli. Similarly, MCA Nepal will also work on the upgradation of a 77-kilometer road section of the East-West Highway stretching from Bhalubang, Dang to the border point between Bardiya and Dang which will cost USD 52 million.
It has been five years since Nepal signed the Millenium Challenge Corporation (MCC) Compact agreement with the United States in September 2017. However, political wrangling over the MCC in the country delayed the USD 500 million grant assistance projects. Khadga Bahadur Bisht, Executive Director of MCA Nepal, is very hopeful that there will be fewer disturbances in the construction of the projects and that the issues will be resolved without much difficulty as political parties and general people have started to realize the benefits of the projects undertaken by MCA Nepal. In a conversation with the HRM, Bisht talked about the current status of the projects, how MCA Nepal is moving ahead by resolving the problems and the lessons to learn for avoiding controversies in receiving foreign development assistance in the future. Excerpts:
Q: After the parliamentary ratification of the MCC Nepal Compact in February, how is MCA Nepal moving ahead with its projects?
A: As the MCC Nepal Compact ratification took place in mid of the year, we could not implement the annual program designed for last year. Because of the controversy that surrounded the MCC Nepal Compact, land acquisition and the tender process could not be moved ahead. Now, with endorsement from the parliament, we are at the preparatory phase.
Currently, we are moving forward with the tender process for the transmission line and road projects; the process will be completed by 2022. Land acquisition will commence after one month and the selection of the consultant for the purpose has reached the final phase.
To start the construction of the projects, there are preconditions in the MCC Nepal Compact that the works on land acquisition and site access need to be completed. So, we are working on determining the price of land that falls under the transmission line.
We are planning to complete the bidding process and select the contractor in the next six months. Our plan is to elevate the transmission line and road projects to the implementation stage by August 2023; the five-year count for project development starts in August 2023 as per the MCC model.
We have undertaken the construction of the 315-kilometer transmission line. We will be contracting this project in three packages. And, there are another three packages for the construction of sub-stations. Altogether, there are six packages under the transmission line project. There is also a road project package under which a 77-kilometer road section of the East-West Highway stretching from Bhalubang, Dang to the border point between Bardiya and Dang, will be upgraded. Initially, a 40-kilometer section of the Highway will be upgraded, and a Danish company is working to prepare the design of the road project. We have recently received the first draft of the design. Altogether, there will be seven contracts. We are adopting the Fidic Yellow Book Contracting for transmission line and substation contract.
Q: With parliamentary ratification, the major obstacle of the MCC Nepal Compact has been addressed. As the project goes into the implementation stage, what major hurdles do you see?
A: We had never thought the parliamentary ratification of the MCC Nepal Compact would become such a huge issue. With the parliament endorsing the Compact, we have overcome that hurdle. As we move into the implementation phase, we see land acquisition could become a major hurdle.
There could be issues related to compensation in semi-urban and urban areas where the transmission line passes through especially while the line is reaching to sub-stations. The alignment work of the transmission line has been completed. We held a public hearing during the environmental impact assessment in all 30 municipalities of the project areas. In order to address the comments received during the hearing, about 28 and a half kilometers will have to be realigned.
Q: In Nepal, infrastructure projects are not completed in the predetermined time as most government development plans suffer from cost and time overruns. In the case of MCA Nepal, there is a time-bound implementation plan. How hopeful are you that the projects will be completed within five years?
A: This is the most frequently asked but very important question. We have clearly defined the preparation and implementation phases. Currently, we are working on the preparation phase. We believe that this model will help to achieve the target by the stipulated deadline.
The methodology and selection process of the contractor is being carried out through fully competitive bidding. It is necessary to pass the technical evaluation as the emphasis on technical qualification is very high, meaning that the lowest bidder will not necessarily be awarded the contract. The bidders who come as the best in technical evaluation will have more chances to win the contract. In this way, we believe contractors having capable human resources and capital will be selected.
MCA Nepal does not function as a regular government department as it is a single-purpose agency. All the staff including me, and my colleagues have been recruited only for this project. We don’t have the liberty to ask for transfers to another government entity. We have no other mandate than to complete this project. Due to all these reasons, we believe that we will complete the project on time.
Q: What kind of role do you expect from the subnational governments to resolve the potential problems?
A: The good thing is that the local elections have recently been held and new leadership has taken charge at the local levels across the country. The new local governments will remain in place as we take the project forward. Once the construction of the project gains momentum, we believe there will be continuity. That’s why we have reached out to all political parties and local communities and explained the project to them to clear up the confusion. As we have seen various positive and negative feedback and views about the project in the past years, we will move ahead with educating the people about the projects.
Q: MCC Nepal Compact was the most debated and discussed issue in the country in the last one year. There were also many misconceptions about it. What is MCA Nepal doing to remove the confusion about Nepal Compact?
A: When the controversy over MCC Nepal Compact was at its peak, we thought the project has almost reached its breaking point. Now, the project is moving ahead.
We’ve been scanning the views and comments about the project on our social media platforms. We are observing the perception of people toward the projects undertaken by MCA Nepal has largely changed of late. It is good that people are gradually realizing the importance of the projects for the development of Nepal.
We have been asked by political parties of both sides, those supporting the MCC Nepal Compact and those opposing it, when are we starting the construction of the projects? Given their concerns, I believe, we still need to consult with them to take Nepal Compact forward. As it is said ‘seeing is believing’, I believe people will start realizing this is an infrastructure project once the construction of transmission towers begins.
Now people in the project areas will come to us, to ask for jobs and to negotiate for compensation, which in fact should be the challenges and they bode well for the project development.
Q: The Nepal Electricity Authority (NEA) has expressed its interest in developing the 400kV New Butwal-Gorakhpur Cross Border Transmission Line and has asked MCA Nepal to drop the 18 kilometers long section of the project from its plan. What is MCA Nepal planning to do in this regard?
A: NEA exported electricity worth about Rs 4 billion to India in the last fiscal year. It is really a big achievement for a country like Nepal which remained a net importer of electricity from India over the years.
With India in dire need of electricity, NEA naturally wants to export more power there as the market is ready to absorb it. For exporting more power to India, the NEA wants the New Butwal-Gorakhpur Cross-border Transmission Line to be ready in the next 25-30 months. However, MCA Nepal is going into the implementation stage only next year which might hinder NEA’s ability to sell electricity.
In that scenario, NEA has proposed to develop the Nepal section of the cross-border transmission line by itself. We are currently discussing the issue with the NEA. While the final decision is yet to be taken, we will do what is best suited for the country.
Q: Given the controversy over the MCC, how Nepal should be prepared to receive foreign development assistance, especially those from powerful nations? What lessons there are to learn from the MCC episode?
A: It is important to hold comprehensive discussions with all stakeholders prior to signing an agreement like MCC Compact.
There should have been a clear discussion about how small countries like Nepal can take benefit from foreign assistance without getting embroiled in the geopolitical discussion. We as a sovereign democratic nation are capable to take our own decision but we need to determine what is best for us and the things we can and cannot do and refrain from politicizing development projects.
Options are available for the government to accept or reject any development assistance. However, it does not mean choosing and rejecting on an ad hoc basis. To avoid repeating controversies in the future, we should discuss in advance the kind of grant and loan we can accept and the kind of agreement we can enter into.
