Kandel highlights ‘17 conflicting issues in MCC deal that may hinder Nepal in the long-term’


KATHMANDU, Jan 28: Public sector innovator Er. Dipendra Kandel has expressed serious reservations over the Millennium Challenge Corporation (MCC)’s Compact deal, which the Government of Nepal signed with the United States in 2017.

Kandel, organizing a press conference at the Reporters’ Club Nepal on Tuesday, has pointed out more than a dozen conflicting issues in the US grant agreement for Nepal, which, according to him, “may hinder Nepal in the long-term despite the amount of money potentially being invested.”

Under the project, the US government will provide a $500 million grant to Nepal– which includes electricity transmission project of $398,200,000, transportation project of $52,300,000, program administration of $40,000,000 and monitoring and evaluation of $9,500,000.

Since its creation by the US Congress in January 2004, the MCC–which has tried to deliver smart US foreign assistance by focusing on good policies to promote economic growth, reducing poverty and strengthening institutions– has made a very good impact on the forty-eight countries who are part of the deal as it attempts to reduce poverty through its innovative missions.

“The MCC is committed to delivering sustainable economic growth and poverty reduction in Nepal throughout the entire lifecycle of its investments in transmission lines and road maintenance which is a welcoming step to aid cooperation with the US,” said Kandel.

“The MCC’s evidence based approach is rooted in the mission, and its comprehensive results framework seeks to measure, collect and report on the outputs, outcomes, and impacts of MCC investment which is completely on behalf of our country,” he added.

“The MCC has approved these investments in Nepal which can create several employment opportunities for the Nepali citizens. Thus, I am grateful to the MCC and the United states for this grant to our country.”

“However, in contrast, I have a number of issues with this agreement and the nature of the program the MCC has for Nepal, which may hinder our country in the long-term despite the amount of money potentially being invested,” he furthered.

TO THE US and US Envoy

Kandel also warned the MCC deal may pose a great threat to Nepal as the presence of the US in the country may attract terrorist groups such as ISIS, Al Qauda and Taliban.

“Our country is very safe as we do not have any enemies, but the situation of the United States of America is different as they have many. I remain concerned that groups such as ISIS, Al Qaeda, and the Taliban have intent to carry out large-scale attacks in the US and against its citizens of any kind. As such, I wonder if those groups would ever think of coming to Nepal in order to harm American citizens working here. Unlikely as it may be, if the situation ever became the case, then this would be the worst possible outcome from the MCC Deal,” Kandel said.

He also expressed dissatisfaction toward US Ambassador to Nepal Randy Berry’s efforts to explain the MCC using Nepali language, while also questioning if the MCC intends to return to the US after the project completes.

“I have seen the efforts of ambassador Berry, meeting with political leaders and explanation about the MCC in the Nepali Language but I believe this is completely against the norms of diplomacy. I have also gone through your explanation video and the MCC agreement in detail. Based on the documents and your explanation, I am personally not satisfied that the MCC intends to return to the United States following the completion of its project,” he said.


Kandel also urged the government to reject the entry visa for the MCC to Nepal.

“I am very much hopeful and confident that the Government of Nepal led by Nepal Communist Party Chair K P Sharma Oli will reject the entry visa for the MCC to Nepal,” he said.

Kandel highlights the contradictory issues in the agreement as:

  1. There is no primary reason for the US to select Nepal for the MCC grant.
  2. The reason for selecting the transmission lines and road maintenance as the deal’s main project is not clear.
  3. It is not clear why the project should be implemented on top of the United Nations Development Program Sustainable Development Goals 2030 as it feels like a duplication. The United Nations Development Program (UNDP) and SDGs have been adopted by all the UN member states since 2015 as a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity by 2030. As a result, the MCC should either give money to the UNDP, the same amount the MCC is planning to invest in Nepal, or wait until the end of 2030.
  4. Nepal and the MCC agreed to work for Electricity Transmission Project and Transportation Project whereas SDGs No. 7 is to provide affordable and clean energy and No 9 focuses on industry, innovation and infrastructure. Thus, the same goals are being duplicated.
  5. Thus, there is no reason for implementing the MCC deal before 2030. If the government agrees to implement the deal before the UNDP SDGs 2030, then it will have a huge impact as there is no similar program for Nepal. There are 49 countries in the world including Nepal which have used the MCC’s grant and out of them, 10 countries have implemented this after 2015. The other 39 countries closed this deal before 2015 which seems very appropriate.
  6. The data of electricity transmission and road maintenance on the data sheet is not available, which which is considered to evaluate any country for an MCC grant.
  7. There are contradictions in the data collected by the MCC for Nepal with the data from the Mohammed Bin Rashid Knowledge Foundation (MBRF) which was prepared in collaboration with United Nations Development Program (UNDP). For example: The index of Government Effectiveness is better in MBRF than MCC.
  8. Countries of our region like India and Bangladesh where there are high numbers of poor people, more so than Nepal, are not implementing this. This is another valid reason not to use it before 2030.
  9. Since the countries like India and Bangladesh are not adopting this policy at the moment, we will not get the Regional Integration option later if we like to extend the MCC through its third policy, Regional Integration. For example, the current five countries selected for Regional Investments are from Western Africa which include Benin, Burkina Faso, Ivory Coast (Côte d’Ivoire), Ghana and Niger.
  10. In the case we would like to empower the country through the economic cooperation within the region using the Regional Integration method, it would create a problem for not having such programs in our region. Sri Lanka is found to be interested but we do not have much economic relations with the state. Our main economic collaboration is with India and Bangladesh. Thus, without having their involvement, it might create a problem in the future even though the MCC is implemented in Nepal only.
  11. Our country has signed a compact agreement which is clearly a 5 year agreement but MCC 2017 datas and agreement based on this needs to be updated with 2019 datas which shows our country’s government effectiveness as better. Thus, we need to verify that the project related to electricity transmission lines and road maintenance are still required and important.
  12. There are serious doubts on the data published by the MCC on its website. Data taken by the MCC is completely wrong in some categories, like the population of Nepal is decreasing after 2013 and again after 2019 which is not correct as per the latest data by other sources.
  13. As per the agreed project investment, we are receiving USD 398200000 for the Electricity Transmission Project. However, it is important to have more investment in Hydropower rather than in transmission first. Even if we use that amount for construction of Hydropower then we can only have 113 MW of electricity which is very low. Thus, either we exceed the investment of the MCC for hydropower or just cancel the amount for the Transmission project only.
  14. The MCC, in its website, quotes: “These investments not only support stability and prosperity in partner countries but also enhance American interests”. What is the meaning of ‘American interests’ is not stated in detail.
  15. Moreover, the statement “With cost-effective projects, a lean staff, and an evidence-based approach, the MCC is a good investment for the American people”, verifies the US is investing money in Nepal apparently for the American People.
  16. We can not bring American employees to Nepal and put them in danger as they have many enemies like the Islamic State of Iraq and Syria (ISIS), Al Qaeda , and the Taliban. Such groups, might use our land to react to the USA by taking action on the American people while working in the rural areas where our government cannot give them security. Thus, american employees should not be accepted in this deal.
  17. Section 7.1 of the agreement says “the Government will proceed in a timely manner to complete all of its domestic requirements for this Compact to enter into force. The Parties understand that this Compact, upon entry into force, will prevail over the domestic  laws of Nepal”. This is an unexpected condition by the US thinking of prevailing others country’s law and its sovereignty.