Nepal Compact

Nepal is one of the poorest countries in Asia, with nearly half of the population living on less than three dollars a day. It continues to face extensive economic development challenges caused by high transportation costs to move both goods and people as well as an inadequate supply of electricity. Decades of political transition and the devastating earthquakes of 2015 further compounded Nepal’s development challenges.

MCC’s Nepal Compact is designed to increase the availability of electricity and lower the cost of transportation in Nepal. These investments will help the Government of Nepal better deliver critical services to its people, ease the movement of goods around the country, and open up new opportunities for private investment. Strengthening the reliability of key infrastructure will put the country’s economy on a firmer growth trajectory, advance stability, support regional security, and reduce poverty.

An additional $130 million from the Government of Nepal in support of the compact − the highest up-front contribution from a partner country − enables MCC’s investment to have an even greater impact.


Compact Budget


  • Signed:
    September 14, 2017

Compact Projects

Electricity Transmission Project

The objective of the Electricity Transmission Project is to increase domestic electricity consumption by improving the availability and reliability of electricity in Nepal’s electricity grid. Specifically, the project will expand and strengthen the high voltage electricity transmission network to support new investments in generation. The project includes the construction of approximately 300 kilometers of high voltage power lines, equivalent to one-third the length of Nepal; the addition of a second cross-border transmission line to facilitate electricity trade with India; and activities to improve sector governance to promote private investment.

Projected Long-Term Results

Transportation Project

Nepal struggles with poor road quality, inefficient customs and border enforcement, an inefficient trucking industry, and poor road coverage. To address the high cost of transit, the objective of this investment is to maintain road quality across the strategic road network, preventing further deterioration of Nepal’s road network which makes travel challenging and expensive. The project includes an incentive-matching fund to encourage the expansion of Nepal’s road maintenance budget, in addition to the periodic maintenance of up to 305 kilometers of the country’s strategic road network. Investments in this sector are critical to promoting economic activity.

Projected Long-Term Results

As of December 10, 2018