MCC will do no harm to Nepal: Experts

Kathmandu, Feb. 4

While wrangling over the grant support of US$ 500 million is creating a wide political divide, experts have said that the squabble could incur a serious damage to the inflow of foreign support in Nepal and its foreign relations.

Nepal and the Millennium Challenge Corporation (MCC), an agency of the United States' government, signed an agreement on September 14, 2017 for a US$630 million project, with $130 million investment from Nepal, to develop cross-border transmission lines and rehabilitate the strategic roads.

Project implementation agreement for the programme was signed on September 29, 2019 with a decision to launch the project on June 30, 2020.

But the largest grant support was pushed into controversy before the commencement of its execution. While on the one hand, MCC – named as Millennium Challenge Account – Nepal Compact – became a contentious issue in the political, development and diplomatic circles, on the other hand, there were targeted communication including trolls and fake news about the project.

The country recently saw a clear political division on the issue with the erstwhile ruling Nepal Communist Party’s leaders taking sides or going against the project.

While the agreement with the MCC clearly mentions that no military or quasi-military activities could be allowed under the pact, some political leaders are propagating fake information, said the experts.

"Some of the leaders are giving their statements without going through the pact. It also needs a qualification to understand the issue," said senior advocate Prof. Dr. Gandhi Pandit, an expert of contract law.

He said there was no provision in the agreement to force Nepal to abide by the US laws, rather if the former felt that the project was not in our national interest, Nepal can scrap the agreement giving a 30-day deadline.

Prof. Pandit also said that while there was no strict provision to present the agreements like the MCA in the parliament, it would do no harm if it is tabled in the House of Representatives.

Udaya Shumsher Rana, who was the Minister of State for Finance at the time the grant agreement was signed, said that the current dispute surrounding MCC was a product of political infighting in the former Nepal Communist Party (NCP) rather than any genuine objection to the aid.

Nepali Congress leader Rana shed light on the timeline of events. “The MCC agreement was signed in September 2017 and for nine months, no one raised any objections. But when relationship between the various factions within the NCP soured, this issue was thrust into the spotlight to put pressure on the then government of Prime Minister KP Sharma Oli.”

Rana regretted the amount of misinformation that has been spread about the American grant, which in his words is “essentially free money” and asked people to understand that it would help the country develop

“The grant will support Nepal’s hydropower and road infrastructure, both crucial sectors for Nepal’s development, and will put money into projects that Nepal itself has prioritised and recommended,” Rana said.

“We are okay with taking out loans to construct Pokhara International Airport but are not okay with using free money for our infrastructures?” Rana questioned.

With regard to the controversy surrounding MCC, Rana urged all parties to favour the national interests. “Let us do what is best for our country.”

Expert in hydroelectricity and former Vice President of Independent Power Producers Association of Nepal (IPPAN), Kumar Pandy, said that it was unfortunate that the project that Nepal wanted to develop with the grant is pushed into controversy.

He said that Nepal needs the transmission line project at any cost and if it was not developed with the MCC grant, the country immediately need to find another source of funding.

"Rejecting a grant support extended by a friendly country at the stage of implementation will do much harm than good to Nepal. It will surely affect the grant support from the USA and other countries and institutions in future," said Pandey.

According to him, if the project was not in Nepal's interest, six governments, prime ministers and finance ministers would not have supported it and signed the compact.

Similarly, Dr. Nishchal Nath Pandey, director of the think-tank Centre for South Asian Studies, opined that the ongoing debate around MCC had raised questions about Nepal’s ability to take                    decision on crucial issues.

Published in The Rising Nepal daily on 5 February 2022. (prepared jointly with Aashish Mishra)