Celebrating the past, present, and future of the US-Nepal bilateral relationship

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MCCFile: Members of US-Nepal Friendship Team II.

This year, the United States and Nepal celebrate 77 years of bilateral relations. Since 1947, our nations have built an open, responsive, and collaborative friendship that has stood the test of time.

The US Embassy in Nepal advances this close friendship through a mutual goal of helping Nepal build a peaceful, prosperous, resilient, and democratic society. This commitment has been demonstrated across the US government.  For example, the US Agency for International Development started working with Nepal in 1961 with a focus on health, education, democratic systems, and infrastructure. 

The first Peace Corps volunteers arrived in 1962 and to date nearly 4,000 volunteers have served in Nepal providing quality education, building health care capacity, and improving the nation’s food security. The Department of State has a long history of supporting exchanges, grants, and the preservation and restoration of historical and cultural buildings through our Ambassadors Fund for Cultural Preservation.  More recently, other parts of the US government have developed new partnerships in Nepal, such as the US Forest Service; the US Department of Justice; and most recently, the US International Development Finance Corporation, which has committed $273 million in direct funding or loan portfolio guarantees to support agricultural and small and medium-sized enterprises, particularly women-run enterprises.

The Millennium Challenge Corporation (MCC) has been a part of this US-Nepal partnership, working with Nepal since 2011 to reduce poverty through inclusive and sustainable economic growth. This year also marks MCC’s 20th anniversary. Over its two decades, MCC has invested nearly $17 billion across 47 countries in infrastructure and policy reforms in health, education, power, agriculture, and transport, with programs expected to benefit over 400 million people.

Shaping a brighter future for all

Transmission line project - MCC - MCA

In 2011, Nepal was selected by the MCC Board of Directors to develop a threshold program, an MCC grant program that primarily supports policy and institutional reform. In December 2014, MCC’s Board of Directors voted to develop a full compact with Nepal providing a grant program that combined institutional reforms with infrastructure development. In September 2017, MCC signed the MCC Nepal Compact, a $500 million grant agreement with the Government of Nepal.

As the Resident Country Director for MCC in Nepal, I have the honour of working with a hardworking and dedicated group of MCC staff. The other team I feel honoured to collaborate with is the staff at MCA-Nepal, the Government of Nepal’s implementing agency for the MCC Nepal Compact. The team is made up of extremely talented engineers, managers, and administrators with decades of experience delivering infrastructure successes for the people of Nepal. Also, I have the pleasure of working in tandem with the MCA-Nepal leadership team and the multi-disciplinary MCA Nepal board, chaired by the Ministry of Finance, that provides guidance and oversight to MCA Nepal for their work to implement the compact in a transparent, environmentally sensitive, and timely manner.

While great strides have been made in Nepal’s energy sector in combating load-shedding and increasing overall electricity generation in the last decade, a sizable portion of Nepali citizens should have more reliable access to the country’s sustainable, affordable, clean hydropower resources. 

Better access to reliable electricity means industries and economic activities can continue around the clock with lower energy costs—more students can study at night, hospitals can provide better care with functioning equipment, and businesses can grow and thrive. 

The MCC Nepal Compact will not only help Nepal make strides in achieving its domestic power goals, but it will also help Nepal realize more of its economic potential through cross-border power trading.

The MCC Nepal Compact is working towards building powerlines that will not only bring clean energy generated by Nepali hydropower resources to Nepali homes and businesses but also significantly increase Nepal’s capacity to export renewable energy throughout the region leading to greater prosperity for Nepal.

Improvement in transmission infrastructure will help draw more private sector investment. An increased supply of reliable electricity will help consumers meet their energy needs and pave the way for a brighter future for all Nepalis. In short, the MCC Nepal Compact will be good for Nepal’s roads, electricity transmission, and future. It will power and pave a path to greater prosperity for Nepal, with Nepal itself at the helm.

The United States first made its contribution to the growth of Nepal’s energy sector by launching the Upper Bhotekoshi Hydroelectric Plant through U.S. direct investment. It has generated power for the people of Nepal since 2001. The MCC Nepal Compact is building on this tradition and success creating infrastructure to increase the supply of electricity into the network. The MCC Nepal Compact will build a transmission backbone that will allow more efficient movement of electricity across the grid, allowing supply to better meet demand and contribute to the cross-border trade of clean energy to India and the region.

The MCC Nepal Compact will make travel less expensive, the movement of goods easier and safer for drivers, travellers, and commuters along one segment of the East-West Highway using climate-smart, sustainable technology to recycle asphalt that extends the life of roads, is easier to maintain, and better for the environment. 

MCC is proud to be part of the United States’ longstanding legacy of growth and prosperity of Nepal. As MCC Resident Country Director, I find reflecting on MCC’s engagement with Nepal to be a window into the country’s growth and development in the last 15 years.

A legacy of powering and paving a path to prosperity

MCC

Around the globe, the United States through MCC has collaborated with governments to design projects which spur economic growth and improve the lives of millions. In Nepal, MCC worked with the Government of Nepal to design a grant program focused on energy and roads to boost the economy and improve the livelihoods of people across Nepal. As the Resident Country Director for MCC in Nepal, I am proud to be part of the United States’ efforts to spur economic growth in Nepal in partnership with the MCA-Nepal team.

Since 2017, the Government of Nepal has constructed more than 34,100 kilometres of roads, according to the latest Economic Survey from the Ministry of Finance.  We know that improved roads are essential to poverty reduction, social inclusion, and economic growth. The United States has long understood the impact of roads in Nepal since it funded the construction of some of Nepal’s first roads outside the Kathmandu valley.

In line with being responsive to Nepal’s needs, the largest component of the MCC Nepal Compact is the Electricity Transmission Project. The energy sector in Nepal has grown significantly in the past 10 years. The government has set new and ambitious goals, including making the largest single-country contribution to an MCC project, to significantly expand the reach of reliable and affordable electricity to power homes and businesses in Nepal while improving the potential for Nepal to export excess electricity across the region.

In marking 77 years of diplomatic relations between our two great nations, it’s worth reflecting on how much has changed for both countries in those decades, how our partnership has adapted to the needs and priorities of both nations and how our partnership has only grown stronger over this time.

Over the next four years, we are confident that the MCC Nepal Compact will continue to build momentum alongside Nepal’s burgeoning energy sector, meeting Nepal’s evolving needs and bolstering its energy sector’s immense potential. We will continue to keep the Nepali people informed about the MCC Nepal Compact’s significant benefits for their economy, their prosperity, and their lives and we will continue to partner with Nepal to shape a brighter future for all Nepalis.

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