Why MCC’s new $50 million boost has potential to take Nepal’s connectivity to next level
November 20, Kathmandu: The Millennium Challenge Corporation (MCC) Nepal Compact, one of the most significant grant-based infrastructure programs in the country’s history, has now exceeded NPR 100 billion (approximately $747 million) after the United States announced an additional $50 million (around NPR 7 billion) in funding.
This new grant brings the total U.S. contribution to $550 million, while the Government of Nepal’s share remains $197 million, pushing the overall compact value to $747 million.
Why MCC Matters for Nepal’s Connectivity
The MCC Nepal program is designed to address two of the country’s biggest bottlenecks: reliable electricity and efficient transportation. By building 400 kV transmission lines spanning over 300 km and upgrading more than 100 km of strategic roads, the compact directly addresses the missing links that have long hindered economic growth, industrial expansion, and regional trade.
Key Highlights of the Additional $50 Million Grant
- Completes critical gaps in the national electricity transmission grid
- Strengthens Nepal’s power system reliability and enables larger cross-border energy trade (especially with India and Bangladesh)
- Upgrades vital road sections to improve market access for farmers and businesses in rural areas
- Introduces American best practices in energy infrastructure and maintenance
- Opens opportunities for U.S. technology and companies in Nepal’s growing energy and infrastructure market
Boosting Connectivity and Transportation
With the expanded funding, the Electricity Transmission Project will now fully close remaining high-voltage loops, dramatically reducing outages and enabling Nepal to export surplus hydropower. Simultaneously, the Road Maintenance Project will ensure all-year connectivity on key highways, cutting transportation costs and travel time for goods and people.
U.S. Embassy in Kathmandu stated: “This additional support reflects the strong partnership between the United States and Nepal. It delivers high-impact, debt-free infrastructure that will drive economic growth for decades while expanding international connectivity.”
Originally signed at $500 million in 2017 and ratified by Nepal’s Parliament in 2022, the MCC Nepal Compact is now one of the largest single grants ever received by the country, entirely free of loans or debt. Implementation is progressing, with major transmission lines and road upgrades already underway in a few places.
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