MCA-Nepal triumphs in legal battle, clears path for power transmission project

KATHMANDU: In a landmark development, the Millennium Challenge Account Nepal (MCA-Nepal) has successfully overcome a significant hurdle in the implementation of the $500 million Millennium Challenge Corporation (MCC) project.

The Supreme Court of Nepal issued a decisive verdict on January 28, dismissing a writ petition filed by Tata Projects, an Indian company involved in the construction of electricity transmission lines.

The legal dispute emerged after MCA-Nepal, in October 2023, canceled all contracts for the transmission line project, citing excessively high bids from contractors compared to the estimated cost. Tata Projects, seeking an interim order against the tender process cancellation, filed a writ challenging MCA-Nepal’s decision.

The joint bench of Supreme Court Justices Hari Prasad Phuyal and Sharanga Subedi ruled that the decision to call off the tender was justified, considering the significant cost difference. The full text of the verdict, released recently, has given the green light for MCA-Nepal to proceed with a new tender process.

The initial contract notice for the construction of a 315 km long 400 KV transmission line was issued on November 28, 2022, divided into three sections: Lapsiphedi-Ratmate-New Hetauda, Ratmate-New Damauli, and New Damauli-New Butwal to Indian border lines. All three contracts were canceled due to bids that were 60 percent higher than the estimated cost.

The MCC project, which entered the construction phase on August 30, 2023, aims to complete the transmission lines within five years. However, the project has faced delays due to issues related to contract awards, design parameters, and land acquisition.

MCA-Nepal, responsible for the project, has faced challenges in acquiring the necessary 1,471 hectares of land in 10 districts for the transmission lines. The process is ongoing, with 20.27 hectares of land already acquired in Nuwakot for the Ratamate substation.

The MCC project involves the construction of 856 towers, necessitating the felling of approximately 212,000 trees. The approval process for tree felling and land acquisition is underway, with an estimated project cost of $228 million (Rs 29.64 billion).

Despite the legal and logistical hurdles, MCA-Nepal remains committed to the successful execution of the MCC project. The House of Representatives ratified the MCC grant agreement on February 27, 2022, emphasizing in a 12-point explanatory note that the project should not be associated with any military alliance and must adhere to the Constitution of Nepal.

The recent Supreme Court verdict has now paved the way for the much-anticipated rebidding process, bringing the ambitious electricity transmission project one step closer to reality.