Major Setback in MCC Compact as Transmission Line Bids Rejected

The implementation of the Millennium Challenge Corporation Compact in Nepal has encountered a significant roadblock, as bids for the construction of a vital transmission line have been rejected.

The Millennium Challenge Account Nepal (MCA-Nepal) announced on Friday that the bids were denied due to a substantial deviation from the initial cost estimates set forth in the procurement guidelines. The estimated budget for the project, which covers three distinct lots, was publicly disclosed at $220.60 million during the bidding process. However, the combined lowest price quoted by bidders for all three packages amounted to a staggering $365.93 million, as revealed by MCA-Nepal. This quoted figure represents nearly 66 percent above the estimated budget.

As a result of the rejected bids, Nepal is now faced with the challenging task of initiating a fresh tender process. While this decision aims to align the project costs with the original estimates, it will unavoidably reduce the project’s implementation timeline. The Millennium Challenge Compact, once commenced, spans five years for project completion, after which the initiatives are to be handed over to Nepal, according to MCA-Nepal.

With the need for new bids, the contractor selection process is expected to extend over several additional months. It is worth noting that the initial bidding process began in November of the previous year. The compact officially entered into force on August 30, and the projects are scheduled for completion within five years from that date. However, with this unexpected delay, concerns have arisen regarding the feasibility of meeting the project deadline.

Nepal’s Parliament ratified the highly debated MCC compact in February of the previous year. The agreement, dating back to 2017, between the Nepalese government and the Millennium Challenge Corporation paved the way for a substantial $500 million investment by the United States in Nepal’s power and transport infrastructure. The government of Nepal, in a corresponding commitment, is contributing $197 million in support of the compact.

This setback in the implementation of the Millennium Challenge Corporation Compact underscores the complexity and challenges that can arise in large-scale infrastructure projects. It remains to be seen how Nepal and its partners will navigate this issue to ensure the successful completion of the ambitious initiatives set forth in the compact.