Nepal approves EIA report of the MCC funded electricity transmission project

By Laxman Datt Pant

Nepal approves EIA report of the MCC funded electricity transmission project

The Ministry of Forest and Environment (MoFE) of Nepal has approved the Environmental Impact Assessment (EIA) report relating to the Electricity Transmission Project (ETP) that is funded by the U.S. Government’s Millennium Challenge Corporation (MCC) and co-funded by the Government of Nepal (GoN).

Implemented by the Millennium Challenge Account Nepal Development Board (MCA-Nepal), the ETP aims to transform Nepal’s power sector by expanding and strengthening the high voltage electricity transmission network to support new investments in power generation.

“The EIA includes an Environmental Monitoring Plan and specifies an environmental audit process to identify any non-compliance including corrective actions to ensure fulfillment of the commitments in the EIA report. Following the approval of the report, MCA-Nepal will now initiate a process to receive the approval for the use of national forest area and removal of trees and plants,” the press statement issued on May 18 by MCA-Nepal reads.

Approved on 29 April 2021 by the MoFE with a ministerial-level decision, this endorsement is expected to be a major part of the project’s preparatory works now underway for the construction of transmission lines and substations under the ETP.

  • The EIA report, prepared according to existing laws in Nepal, is in compliance with Nepal’s Environment Protection Act, 2019 and Environment Protection Rules, 2020
  • The EIA includes a detail Environmental, Social, Health and Safety Management Plan to ensure the safety of workers and communities affected by the project during its implementation
  • One of two projects, the ETP is designed to build around 314 km of 400 kV transmission lines and three 400 kV sub-stations
  • The project includes the addition of a second cross-border transmission line to facilitate greater electricity trade with India
  • The project’s activities also aim to improve sector governance to increase private investment
  • The transmission lines will pass through 30 municipalities and rural municipalities covering 10 districts of Nepal
  • This project also aims to benefit affected local stakeholders through a partnership program
  •  The second project, the Road Maintenance Project, aims to support the maintenance of Nepal’s roads by introducing a new road maintenance technology in the country

Regarding this approval as an important milestone in helping to meet one condition that relates to site access before the MCC Compact can come into force, Khadga Bahadur Bisht, Executive Director of MCA-Nepal, said, “The other important milestone will be ratification of the Compact.” The report has established the existing status of the physical, biological, socio-economic, and cultural environment within the project’s footprint and has suggested measures to mitigate the potential impacts, he added.

Aiming to stimulate economic growth and to reduce poverty in Nepal, back in September 2017 the U.S. Government’s MCC and the GoN signed a US$ 500 million compact.

MCC’s first compact in South Asia, the Nepal Compact, aims to strengthen Nepal’s energy sector, to improve regional energy connectivity, and to control transportation costs in order to encourage growth and private investment.

Combined with the GoN’s commitment of US$130 million and expected to benefit about 23 million people, this compact of US$500 million is the single largest up-front country contribution in MCC’s history. Although Nepal committed to ratify the MCC Compact by September 2019, Nepal’s parliament has not yet done so.