Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: The Millennium Challenge Account Nepal (MCA-Nepal) today officially initiated the construction of the New Butwal Substation and an associated 18-kilometer (km) transmission line in Sunawal, Nawalparasi (Bardaghat Susta West). This infrastructure is a cornerstone of the Millennium Challenge Corporation (MCC) Nepal Compact and is viewed as critical to unlocking Nepal’s potential as a regional energy trading hub.
The $747 million MCC Nepal Compact, jointly funded by a $550 million U.S. grant and $197 million from the Government of Nepal, aims to strengthen the country’s electricity grid and facilitate the long-term power trade agreement with India.
The event was attended by high-ranking officials, including Finance Minister Rameshore Prasad Khanal, U.S. Ambassador Dean Thompson, and MCA-Nepal Executive Director Khadga Bahadur Bisht.
The New Butwal Substation and the 18km line represent a vital component in Nepal’s energy strategy. The line is designed to connect the 400kV substation directly to the Nepal-India border, establishing a major energy trade interconnection.
This infrastructure is essential for the recently finalized 25-year long-term Power Trade Agreement (PTA) between Nepal and India, signed in January 2024, which guarantees the export of 10,000 megawatts (MW) of hydroelectricity to India over the next ten years.
Finance Minister Khanal highlighted the project’s economic significance, stating, “This project reflects the Government of Nepal’s strong commitment to expanding clean energy access, enhancing regional power trade, and supporting our national goal of long-term economic growth. With the support of MCC and MCA-Nepal, we are turning agreements into action for the benefit of the country”.
Once complete, the infrastructure will deliver multiple benefits, including:
U.S. Ambassador Thompson emphasized the partnership’s goal, saying, “Projects like this transmission line and substation will not only help keep the lights on for families and businesses, but also create opportunities for trade, growth, and prosperity across the region. Today’s event is a testament to what we can achieve together”.
MCA-Nepal Executive Director Khadga Bahadur Bisht affirmed that the project marks “a new chapter in strengthening Nepal’s energy security” and will bring “long-term benefits to our citizens”.
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