There is a geopolitical dimension also to the MCC. The project to upgrade Nepal’s electricity transmission lines does not just threaten to split Nepal’s governing coalition, but Nepal’s politicians are also under pressure from the Americans to back the MCC and the Chinese who have intensified their lobbying with the political leadership.
China’s Ambassador to Nepal Hou Yanqi has been actively meeting coalition leaders in recent months to lobby against the MCC, including with the UML’s K P Oli. The head of the International Department of the Communist Party of China (CPC) Song Tao also held a one hour Zoom talk with Dahal of the Maoists Centre last week.
Chinese official media as well as posts on the Weibo platform have been openly attacking American interference in Nepali politics to push the project through. China sees the MCC as being America’s response to its own Belt Road Initiative (BRI), and as Sino-US relations worsen, Nepal and the MCC have been caught in the middle.
With elections approaching, the MCC has also become a factor in Nepal’s domestic politics as well. Deuba finally convinced Dahal and Nepal last month to lift their opposition to holding local elections in May after assuring them that the governing alliance would be intact. But the coalition is not expected to survive if the MCC is put to a vote in the House.
The Americans are putting up a $500 million grant for the project to upgrade transmission lines and highways in Nepal five years after ratification, while Nepal has committed $130 million.
One component of the MCC will upgrade Nepal’s electricity network with a 400kVA transmission line that can also increase export power surplus to India. Nepal’s generation capacity is expected to rise four-fold to 5,000MW by 2025.
Another component of the project is to improve highways in Central Nepal to boost economic growth.