Kathmandu. The future of dozens of stalled projects run with US assistance is still uncertain. With the US government suspending the budget of projects like MCC and USAID for 90 days, the work of currently running projects has been completely blocked.
The US government was planning to provide a grant of US$ 500 million through MCC, and there was a provision for the Nepal government to allocate an amount equivalent to US$ 130 million for the program.
The US government’s decision to immediately stop MCC grants has halted important works on energy and road infrastructure development. MCC was working on the construction of power transmission lines and road maintenance.
Under which, the section from Lapsiphedi, located northeast of Kathmandu, to Ratmate in Nuwakot, west of Kathmandu, the section from Ratmate to Hetauda, the section from Ratmate to Damauli, the section from Damauli to Butwal, and the section from Butwal to the Indian border, the construction of 400 kV transmission lines and three substations in Ratmate, Damauli, and Butwal have been stopped.
Out of the grant received from MCC, about 400 million US dollars were planned to be spent on the construction of 312 km of transmission lines and substations, but this work has also been affected. .
Similarly, on the road side, a total of 100 kilometers of roads will be upgraded from Chandrauta in Kapilvastu district to Shivakhola in Banke and Dang districts via Lamahi. About 52 million US dollars will be spent on road upgrading from the grant received from MCC. The aid will be used to construct a 22-km transmission line of the Butwal-Gorakhpur inter-country transmission line up to the Nepal-India border. Technical assistance will also be provided for capacity development to increase the reliability of the energy sector and the sustainability of MCC investment. The plan has also been put on hold.
The US government was also providing significant assistance to Nepal through USAID. Specifically, USAID had invested in four major projects in Nepal related to health, agriculture, education, and inclusive policies.
The projects are currently on hold due to the decision of US President Donald Trump’s administration to suspend all foreign assistance through the US Department of State and USAID for 90 days.
USAID was implementing a direct financing project in health, with a total budget of $425 million, focused on improving Nepal’s health care system in partnership with federal, provincial, and local governments. This important project is now on hold.
Similarly, the USAID Agricultural Direct Finance Project, for which a budget of $421 million was allocated, was launched with the aim of ensuring food security for 69,000 households. This project is now on hold.
The Education Sector Direct Financing Project, which committed $485 million over five years to provide access to quality education, specifically for disadvantaged and marginalized children, also focused on policy reform and promoting good governance through the USAID Inclusive Policy Direct Financing Project, which was expected to have a positive impact on government policymaking.
Dozens of projects from non-governmental organizations were also supported by USAID. However, the suspension of support for these projects has left their implementation uncertain. The government has not yet made any attempt to find alternative sources.
Joint Secretary of the Ministry of Finance Shyam Prasad Bhandari said that the US President has decided to stop the assistance of MCA and USAID through an executive order and that it is now in a wait-and-see situation. He said that although the government has not yet started looking for alternative sources for the projects currently being run, it will take steps to find sources that have been stalled for a long time.
He said, “The MCA and USAID programs have been suspended immediately following an executive order from the US President. There is a possibility that a review will be conducted in the meantime. If that comes, we will not have any problem. If it does not come, discussions will be held with donors for other alternative sources.” There is also a situation where the Nepal government itself can take forward some projects along with donor agencies.’
According to him, the Ministry of Finance has not taken any decision as it has only said that it is on hold for now. He said that the Ministry of Finance is waiting for the next steps and conclusions of the US government. However, he said that the Ministry of Finance is discussing options internally to take forward the projects.
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