Nepal likely to lose $500 million MCC grant on failure to ratify the project by February 28

KATHMANDU: The Millennium Challenge Corporation (MCC)  has set a February 28 deadline, as per the request made from the Nepal side, for the ratification of the MCC Compact and informed that Nepal’s failure to do so could lead to the end of the $500 million grant programme in Nepal.

“Without action on your part by February 28, 2022, the MCC Board will discuss next steps at its March 2022 meeting, including whether to continue with the Compact. Absent ratification, it is within the Board’s authority to discontinue Nepal’s eligibility to receive the $500 million compact grant from the United States. Such a decision would end MCC’s partnership with Nepal,” states a letter sent by MCC addressing Prime Minister Sher Bahadur Deuba and chairman of CPN-Maoist Centre Pushpa Kamala Dahal.

The MCC has asked the duo leaders to implement their commitment to advance and ratify the Compact early in 2022. “As you know, since 2017, MCC has been your partner in developing sustainable, affordable energy and safer roads for the people of Nepal. Through these programs, the MCC Compact will help reduce poverty and generale opportunities for a better life for millions of Nepalis,” reads the letter.

On December 14, 2021, the MCC Board of Directors met reviewed the status of the Compact with Nepal and discussed Nepal’s September 2021 letter. “The MCC Board noted your commitment in the September 2021 letter to work to ratify the Compact in four to five months from the date of the letter. The Board also acknowledged your plan to increase public awareness of the Compact and actively combat dainformation about the Compact MCC therefore requests that you continue to work with Parliamentarians and coalition partners to ratify the Compact by the timeline indicated in your letter, no later than February 28, 2022,” the letter reads.

The Nepal Compact was MCC’s first compact in South Asia, under which Nepal is eligible to receive $500 million in grant from the United States to strengthen Nepal’s energy sector, improve regional energy connectivity and roads.

Deuba was prime minister back in 2017 also when Nepal signed the MCC-Nepal Compact. He was leading a government backed by Dahal. Incumbent Communication Minister Gyanendra Bahadur Karki signed the compact agreement as the finance minister then.