The most tangible collateral damage of Nepal’s chronic political instability is going to be the effort to streamline Nepal’s electricity grid. Politicians have weaponised the US-supported Millennium Challenge Corporation (MCC) infrastructure grant, and the much-needed project is stuck.
An agreement for the $500 million project was signed by the Nepali Congress (NC) Finance Minister Gyanendra Bahadur Karki in Washington DC four years ago. But since then, it had become a political football in the great game between prime Minister K P Oli and his nemeses Pushpa Kamal Dahal and Madhav Kumar Nepal.
The first hint that the MCC controversy was carrying over to the new government was that it was not included in the ‘common minimum program’ agreed to between the five coalition partners on 9 August.
The Maoists and the Nepal faction have used the MCC so effectively to bludgeon Oli’s government that the rank-and-file are dead against the project. They are convinced it will allow the US military to build missile silos in Nepal aimed at China.
Putting the MCC in context, Jeevan R Sharma and David Seddon
The MCC was launched by the US government in 2004 as an innovative way to end poverty in least developed countries. Nepal met the eligibility criteria and was selected as a partner, and planning for the MCC started during the government of Baburam Bhattarai in 2012. Bhattarai is now in the five-party alliance as a part of the JSP.
Critics have used ultra-nationalism and populism to portray the MCC as a form of US neo-colonialism and imperialism. The Americans fuelled the fire themselves when a US undersecretary of state admitted in 2019 that the MCC was a part of the US Indo-Pacific Strategy aimed at encircling China.
Washington back-pedalled, but the damage was done. There are many who do not need convincing that the MCC in Nepal is America’s geo-strategic response to China’s Belt-Road Initiative.
But because of this political impasse, work on urgently needed electricity transmission lines and highway upgrading has not started. The cost of not having this infrastructure in place will be much more than the $500 million outlay of the project.
Own Goal, Kunda Dixit
The main objective of the MCC is a 315km transmission line between Hetauda-Damauli-Butwal. This power line is critical for the east-west distribution of the 3,000MW of electricity that will be added to Nepal’s national grid in the next three years, nearly double the current generation capacity. Another 2,500MW worth of projects are awaiting power purchase agreements with the NEA and will depend on the MCC transmission lines being in place.
Nepal’s current power need is 1,500MW at peak hours, and despite suppressed demand due to shortage and cost, it is not expected to increase by much in the next three years. Which means Nepal will have a monsoon surplus that can be exported to India, and for this, the cross-border 400KV transmission line from Butwal to Gorakhpur will be necessary.
At present, Nepal imports electricity from India through the Dhalkebar-Muzzafarpur power corridor that has a capacity of handling only 800MW. The MCC line would increase this to 2,600MW, but if the Butwal-Gorakhpur transmission line is not built in the next few years, much of the surplus electricity generated in Nepal is in danger of being wasted, or ‘spilled’ in technical parlance.
Even if the MCC is never ratified by Parliament because of the political deadlock, Nepal needs to immediately start building these transmission lines by itself. Private power producers in Nepal have signed agreements with NEA on the understanding that the transmission lines will be in place to evacuate the electricity they generate.
Because of the nature of the monsoon and Nepal’s east-west territory, there will be surplus electricity in the east while there is a deficit in the west, so the transmission lines are even more critical to balance the national grid.
This is too serious a subject to be left to politicians, or to geopolitics. The NEA’s new head Kulman Ghising needs to sit down with the MCA’s Khadga Bahadur Bista and resolve this one way or another right away.
In the 1960s, at the height of the Cold War and despite sensitivities after the India-China war, King Mahendra went ahead with the Kodari Highway linking Kathmandu to Lhasa. That is the kind of leadership we need now, one that will not be terrified about what one or the other neighbour will say, but decide what is in the national interest and just do it.
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