Notice of First Amendment to Compact With the Federal Democratic Republic of Nepal, 117-119 [2024-31066]

Agencies

• Millennium Challenge Corporation

[Federal Register Volume 90, Number 1 (Thursday, January 2, 2025)]
[Notices]
[Pages 117-119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-31066]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 24-13]


Notice of First Amendment to Compact With the Federal Democratic 
Republic of Nepal

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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SUMMARY: In accordance with the Millennium Challenge Act of 2003, as 
amended, the Millennium Challenge Corporation is publishing a summary, 
justification, and full text of the proposed First Amendment to 
Millennium Challenge Compact between the United States of America, 
acting through the Millennium Challenge Corporation, and the Federal 
Democratic Republic of Nepal. Representatives of the United States 
Government and the Government of the Federal Democratic Republic of 
Nepal plan to conclude the Amendment in January 2025.

(Authority: 22 U.S.C. 7708(i)(2))

    Dated: December 20, 2024.
Peter E. Jaffe,
Vice President, General Counsel, and Corporate Secretary.

Summary of First Amendment to Millennium Challenge Compact With the 
Federal Democratic Republic of Nepal

    The Board of Directors of the Millennium Challenge Corporation 
(``MCC'') has approved an amendment (the ``Amendment'') to the existing 
$500 million, five-year Millennium Challenge Compact between the United 
States of America, acting through MCC, and the Federal Democratic 
Republic of Nepal (the ``Compact'').

Background

    The Compact was signed September 14, 2017, and entered into force 
on August 30, 2023. The Compact aims to increase domestic electricity 
consumption through the Electricity Transmission Project by improving 
the availability and reliability of electricity in Nepal's electricity 
grid, expanding and strengthening Nepal's high voltage electricity 
transmission network to support new investments in generation that 
unlock Nepal's hydropower potential, and facilitating increased power 
trade between India and Nepal. The Compact also aims to maintain road 
quality across Nepal's strategic road network through the Road 
Maintenance Project.

Scope of the Amendment

    MCC proposes to provide additional funding up to $50 million under 
the Compact. The proposed additional funding will be used to cover 
additional costs associated with the Compact's Electricity Transmission 
Project, thus enabling successful implementation of the project.

Justification for the Amendment

    The Compact was signed in September 2017 but did not enter into 
force until August 2023. The protracted delay between signing and entry 
into force, as well as the global inflationary pressures of the COVID-
19 pandemic, resulted in an increase in costs for the Electricity 
Transmission Project. Further, procurement for construction of the 
project's electricity transmission line was not initiated until 
September 2023 and the bids received reflected costs that were 
substantially higher than the original cost estimate, resulting in a 
failed procurement. Despite identifying significant potential 
reductions of cost drivers for a re-procurement of the transmission 
line work, MCC anticipates that the cost of the transmission line work 
will continue to exceed the projected compact budget.
    Providing additional assistance under the Compact to support the 
Electricity Transmission Project will enable successful implementation 
of the Compact's objectives with respect to electricity reform. 
Specifically, the additional MCC funding is necessary for and will 
enable the accountable entity to sign contracts for the transmission 
line work once re-procurement is complete in a timely manner and 
maximize the remaining implementation period without further delays. 
The additional funding will also preserve adequate contingency across 
the Compact to facilitate operational adjustments that may become 
necessary during construction. The economic rate of return for the 
Electricity Transmission Project remains above 10 percent, which 
indicates that, even with cost escalations, this remains a highly 
viable and impactful project. Therefore, additional MCC funding for 
this Compact would constitute a high return investment.

First Amendment to Millennium Challenge Compact Between the United 
States of America Acting Through the Millennium Challenge Corporation 
and the Federal Democratic Republic of Nepal Acting Through the 
Ministry of Finance

First Amendment to Millennium Challenge Compact

    This First Amendment to Millennium Challenge Compact (this 
``Amendment''), is made by and between the United States of America, 
acting through the Millennium Challenge Corporation, a United States 
government corporation (``MCC''), and the Federal Democratic Republic 
of Nepal (``Nepal''), acting through the Ministry of Finance (the 
``Government'') (individually, a ``Party'' and collectively, the 
``Parties''). All capitalized terms used in this Amendment that are not 
otherwise defined herein have the meanings given to such terms in the 
Compact (as defined below).
Recitals
    Whereas, the United States of America and Nepal signed the 
Millennium Challenge Compact between the United States of America, 
acting through the Millennium Challenge Corporation, and the Federal 
Democratic Republic of Nepal, acting through the Ministry of Finance, 
on September 14, 2017 (as modified, the ``Compact'');
    Whereas, Section 2.1 of the Compact provides for MCC to grant to 
the Government, under the terms of the Compact, an amount not to exceed 
Four Hundred Fifty-Nine Million Five Hundred Thousand United States 
Dollars (US$459,500,000) (``Program Funding'') for use by the 
Government to implement the Program;
    Whereas, Section 2.2 of the Compact further provides for MCC to 
grant to the Government, under the terms of the Compact and in addition 
to the Program Funding described in Section 2.1 of the Compact, an 
amount not to exceed Forty Million Five Hundred Thousand United States 
Dollars (US$40,500,000) (``Compact CDF'') under Section 609(g) of the 
Millennium Challenge Act of 2003, as amended (the ``MCA Act''), for use 
by the Government to facilitate implementation of the Compact;

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    Whereas, in accordance with Section 2.2(e) of the Compact, MCC 
notified the Government on June 28, 2024, that the Excess Compact CDF 
Amount of US$16,477,559.41 has been reallocated to Program Funding, 
thereby increasing the total amount of Program Funding to 
475,977,559.41;
    Whereas, the Program involves a project to increase electricity 
consumption by facilitating power trade and by improving the 
availability and reliability of electricity supply in Nepal's 
electricity grid (``the Electricity Transmission Project'' or ``ETP'');
    Whereas, the cost to complete the Electricity Transmission Project 
is now estimated to exceed the associated budget for the project; and
    Whereas, pursuant to Section 6.2(a) of the Compact, the Parties 
desire to amend the Compact to increase Program Funding by 50,000,000,
    Now, therefore, the Parties hereby agree as follows:

Article 1

Amendments

Amendment to Section 2.1 of the Compact
    Section 2.1 (Program Funding) of the Compact is amended and 
restated to read as follows:
    ``Section 2.1 Program Funding. Following entry into force of this 
Compact in accordance with Section 7.3, MCC will grant to the 
Government, under the terms of this Compact, an amount not to exceed 
525,977,559.41 (``Program Funding'') for use by the Government to 
implement the Program. The allocation of Program Funding is generally 
described in Annex II.''
Amendments to Exhibit A to Annex II to the Compact
    Exhibit A to Annex II to the Compact (Multi-Year Financial Plan 
Summary) is deleted in its entirety and replaced by the revised Exhibit 
A as set forth in Annex I to this Amendment.

Article 2

General Provisions

2.1 Entry Into Force of This Amendment
    This Amendment shall enter into force on the date of the last 
signature of the Parties. Nepal represents that the Council of 
Ministers of the Government of Nepal has approved Nepal's signature of 
this Amendment.
2.2 Scope of This Amendment
    Except as expressly amended by this Amendment, all of the 
provisions of the Compact remain unchanged and in full force and 
effect.
    Done in [duplicate] in the English language.

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                                            For the Federal Democratic
    For the United States of America            Republic of Nepal
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[name].................................  [name]
[title]................................  [title]
Date:..................................  Date:
Place:.................................  Place:
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Annex I

Exhibit A to Annex II

Multi-Year Financial Plan Summary

[[Page 119]]

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[FR Doc. 2024-31066 Filed 12-31-24; 8:45 am]
BILLING CODE 9211-03-P