US grants for two key Nepal infrastructure projects suspended after Trump order

By Gopal Sharma

KATHMANDU (Reuters) - Two major infrastructure projects in Nepal funded by the United States have been put on hold after President Donald Trump suspended all foreign development assistance, a government official said on Thursday, making their future uncertain.

Trump ordered a 90-day pause in foreign development assistance on the day he returned to the White House, pending assessments of efficiency and consistency with U.S. foreign policy.

The Millennium Challenge Corporation (MCC), a U.S. government aid agency, agreed in 2017 to provide $500 million to fund a power transmission line and road improvement project in the Himalayan nation, one of the world's poorest countries.

The transmission line was meant to promote power trade between Nepal and neighbouring India.

Shyam Bhandari, a spokesperson for the Ministry of Finance, said the projects have been halted after receiving information from the U.S. funding agency about the suspension.

"All concerned stakeholders have been informed that the activities funded by the MCC Fund...have been halted in accordance with the executive order issued by the U.S. President on January 20, 2025, which enforces a 90-day suspension”, the ministry said in a statement.

Local media reports said some other U.S. grants had also been suspended but Bhandari did not give details. He also did not have information about alternative funding plans.

The work contract for some sub-stations and the transmission line has been signed while other parts of the transmission project and the road project are at the bidding stage, authorities said.

The MCC grant sparked street protests in 2022, with opponents saying it would undermine Nepal's laws and sovereignty as Kathmandu would not have sufficient control over the projects.

It was approved by parliament by a majority vote the same year.

(Reporting by Gopal Sharma; Editing by YP Rajesh and Sharon Singleton)