2026.06.04
On June 3, the Japan International Cooperation Agency (JICA) signed a loan agreement with the Government of Nepal in the capital city Kathmandu, to provide Japanese ODA loan for the Project for Nagdhuga Tunnel Construction Project (II). The signatures were exchanged between International Economic Relations Division Joint Secretary Dhani Ram Sharma of Ministry of Finance of Nepal and Chief Representative Matsuzaki Mizuki of JICA Nepal.
Signing ceremony
This project involves the construction of Nepal’s first mountain road tunnel in a country where mountainous terrain accounts for the majority of the land area and will serve as a pioneering initiative for tunnel development, which is a key transport infrastructure supporting the country’s future socio-economic growth.
During the heavy rainfall in 2024, the tunnel under construction was utilized for evacuation and the passage of emergency vehicles, demonstrating its effectiveness as an alternative route that can bypass hazardous sections in mountainous areas prone to frequent landslides. Furthermore, the project makes use of advanced tunneling technologies that Japan has developed over many years to address the soft and complex geological conditions characteristic of the Himalayan region.
This project, which is being promoted through the joint efforts of many stakeholders from both Japan and Nepal, is expected to further strengthen cooperation and mutual trust between the two countries.
The project outline is explained below.
Terms and Amount of Loan
- Country
(Target Areas)
Nepal (Kathmandu and Dhading district)
- Project Objective
The objective of the Project is to improve the road condition around Nagdhunga pass by constructing a tunnel, thereby contributing to the smooth transportation network between Kathmandu and other principal cities/areas in Nepal.
- Project Component
1) Civil works (Construction of the Tunnel, Construction of the Approach Road, Construction of Bridges, Construction of Distribution Lines, Construction of the Toll Facility, Construction of the Control Office)
2) Consulting services
(Detailed Design, Preparation of Bidding Document, Construction Supervision, Capacity Development for Operation and Maintenance)
- Maximum Loan Amount
5,700 million Japanese Yen
- Annual
Interest Rate
Project: 1.95%, Consulting Services: 0.55%
- Repayment Period
30 Years
- Grace Period
10 Years
- Procurement
General untied
- Executing Agency
Department of Roads, Ministry of Infrastructure Development
- Contribution to SDGs
Goal 8（Decent work and economic growth）
Goal 9（Industry, innovation and infrastructure）
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Planned Implementation Schedule
1. Completion of the Project: July 2026, when the operation of all facilities commenced
2. Issuing of letters of invitation for consulting services (including detailed design work): Already contracted
3. Tendering of announcement of initial procurement package for international competitive bidding on project construction: Already contracted
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