With six months of the five-year project already passed, MCA-Nepal struggles to appoint contractors and complete land acquisition process

Millennium Challenge Account Nepal (MCA-Nepal) has overcome a hurdle for awarding a new contract for construction of electricity transmission lines after the Supreme Court issued a verdict dismissing the writ petition filed against the tender process.

Earlier, in October 2023, the MCA-Nepal canceled all the contracts for the transmission line project citing the high cost offered by the bidders compared to the estimated cost. Subsequently, Tata Projects, the Indian company involved in the construction of the power transmission line project, filed a writ seeking an interim order against MCA-Nepal’s decision to cancel the tender process.

A joint bench of Supreme Court Justices Hari Prasad Phuyal and Sharanga Subedi on January 28 dismissed the writ filed by the Indian company. Releasing the full text a few days ago, the apex court has cleared the way for the MCA-Nepal to go into a new tender.

“As the cost bid by the Indian contractor is way higher than the estimated cost, the decision to call off the tender cannot be considered wrong. In this regard, it is appropriate for the project to go into a rebidding process while maintaining its objectives to serve the country,” reads the full text of the Supreme Court.

The MCA-Nepal had issued a contract notice on November 28, 2022 for the construction of a 315 km long 400 KV transmission line, inviting tenders for constructing the transmission line in three sections.

A total of 315 km of transmission line was to be constructed including the first section of Lapsiphedi-Ratmate-New Hetauda (117 km), second section of Ratmate-New Damauli (90 km) and the third section of New Damauli-New Butwal, New Butwal to Indian border (108 km) lines. All three contracts were canceled due to the contractor companies' bids being 60 percent higher than the estimated cost.

The $500 million Millennium Challenge Corporation (MCC) project was announced to have entered the construction phase on August 30, 2023. The project is supposed to be completed within five years from this date.

However, the project construction has faced hassles in its first step due to the issues related to awarding contracts. According to an official at the MCA-Nepal, the rebidding process has been delayed as the project is in the process of reviewing the design parameters and provisions related to construction.

In addition, the project has also failed to complete the land acquisition till date. According to the MCA-Nepal, a total of 1,471 hectares of land in 10 districts will be acquired for the transmission lines project. So far, it has acquired 20.27 hectares of land in Nuwakot to construct the Ratamate substation. The process of acquiring land for New Damauli and New Butwal substations are currently under progress.

Under the MCC project, 856 towers will need to be constructed for the transmission lines, requiring the cutting down of approximately 212,000 trees. The project is estimated to require 800 ropanis of government and private land. MCA-Nepal has stated that the process of tree felling approval and land acquisition is underway.

MCA-Nepal has estimated that the construction of the transmission line will cost approximately $228 million (Rs 29.64 billion).

After much debate and deliberations, the House of Representatives ratified the MCC grant agreement on February 27, 2022 with a 12-point explanatory note clarifying that the project should not be associated with any military alliance and that the grant agreement must abide by the Constitution of Nepal.