New Nepali Government Faces Dual Challenge: Completing Major Infrastructure Projects Amidst Construction Crisis

Kathmandu. Following the House of Representatives elections, a new government has been formed based on the fresh mandate, taking office on Friday. The administration, led by senior leader of the Rastriya Swatantra Party, Balen Shah, faces a mountain of challenges as well as significant opportunities in the sector of road infrastructure.

On one hand, there is a heap of policy hurdles and a shortage of construction materials, while on the other, the government has the historic opportunity to be the one to 'cut the ribbon' on national pride projects that have been underway for decades.

As the new government takes charge, the largest number of major projects in Nepal's road infrastructure history are nearing completion. If these projects can be finalized on time by untangling technical and administrative knots, the new leadership appears to have an unprecedented opportunity to claim credit and leave a mark of 'delivery' among the public.

The biggest opportunity for the new government is that projects under construction for a long time are now reaching their final stages. Nepal's first modern road tunnel, Nagdhunga, is currently nearing completion and is ready for inauguration. The successful operation of this project signifies Nepal's entry into the 'tunnel era,' the full credit for which will go to the new government.

The Narayanghat-Butwal road section, which has long caused suffering to travelers, is now in the final phase of construction. Similarly, the first section of the Nagdhunga-Mugling road has been completed, and the remaining two sections are also in the final stages. The operation of these strategic roads will bring revolutionary changes to the country's transportation and travel.

The Mugling-Pokhara road, connecting to the tourist city, is also in its final stages. Likewise, the expansion of the Suryabinayak-Dhulikhel road and the work on the Kathmandu-Terai-Madhes Fast Track are proceeding with over 50 percent completion.

'Lifeline' projects such as the Mid-Hill Highway, East-West Highway, North-South Corridor, and Postal Highway are also nearing completion. The inauguration of these projects is certain to give the new government significant 'mileage' for a 'development-friendly' image.

Material Shortage is a Challenge for the New Government

Amidst the opportunity to gain credit, the new government appears set to face the challenge of a 'construction crisis.' The infrastructure construction sector is currently affected by disruptions in petroleum supply due to conflicts in West Asia and a sharp increase in the price of construction materials.

Rabi Singh, President of the Nepal Contractors' Association Federation, states that the price of materials like petroleum products and bitumen has increased by 30 to 60 percent due to disruptions in transportation caused by tensions in the Gulf region and global conflicts.

'The price of bitumen, which used to cost 50 rupees, has now reached 135 rupees. Not only is it expensive, but bitumen imports have almost stopped,' says Singh. 'This pressure of price hikes is making it difficult for contractors to complete many projects on time.'

The cost estimate, including the price of construction materials, is calculated before a project begins, and a construction contract is signed based on that. However, there is no provision to increase the contracted cost when the price of construction materials rises. The requirement is to complete the construction according to the contracted cost. Therefore, contractors, facing losses, have already demanded that the interim government reduce the price of construction materials or declare a 'construction holiday.' Solving this is the first challenge for the new government.

Need for Quality and Alternative Road Construction

Nepal has made significant progress in the quantitative expansion of its road network. Statistics show that about 100,000 kilometers of road network have been expanded across the country. However, only about 14 to 15 thousand kilometers of this are paved. Most roads are still at the 'dozer standard,' according to infrastructure expert Arjun Jung Thapa. These roads suffer from being blocked during the monsoon and having poor quality. There is a need to upgrade at least 30,000 kilometers of roads to gravel or 'semi-blacktop' standard and the rest to paved roads.

Furthermore, the lack of a reliable 'all-weather' road connecting to the capital Kathmandu is still felt. A reliable alternative to the Nagdhunga-Mugling road is particularly necessary. Thapa states that a clear policy is needed on which sector—tourism, hydropower, industry, or agriculture—should be given top priority in road construction.

'Our main problem is the confusion over priorities. We have not been clear about whether to prioritize tourism, hydropower, industry, or agriculture. Plans are made, but their implementation lacks continuity,' he says. 'When South Korea started its five-year plans in 1961, even if the government changed, they would not alter the approved plans by a single inch. But in our case, as soon as the government changes, the tendency to discard the previous government's plans and set new priorities has caused problems in infrastructure.'

The main reason projects are not completed on time is the lack of inter-agency coordination and follow-up. Obstructions in work arise from a lack of coordination between agencies such as roads, forests, electricity, water supply, and local administration.

When influential leaders dominate the selection of policymakers, there are instances where four-lane roads are built in the constituencies of influential leaders while national highways are deteriorating, due to the tendency to hoard budgets in their own electoral areas rather than focusing on equitable national development.

Challenge of Policy Reform

Rabi Singh, President of the Nepal Contractors' Association Federation, states that the main challenge for the new government is to reform the overall policy and legal framework in the construction sector. He argues that the current acts, laws, and regulations are impractical, leading to the collapse of the construction sector. He also mentions that the bureaucracy uses cumbersome laws and regulations to stall work and manipulate the system.

'Corruption has flourished and good governance has not been established precisely because the current laws and regulations are not implementable,' says Singh. 'The new government must 'revisit' all laws and regulations and simplify them so that ordinary people can also comply.' He complains that employees evade their responsibilities by citing legal impossibilities. Furthermore, the cost increases because political parties, local thugs, and administration must be 'managed' at various stages, from the excavation to the transportation of construction materials.

Singh also points out that certain clauses of the Public Procurement Act (such as Sections 59(3) and 8) are impractical. He argues that because there is a provision to recover the entire government budget amount from the construction company if a contract is terminated, officials are afraid to terminate contracts and instead keep extending deadlines, which keeps projects stalled for years.

Capital Expenditure and the Economy

The new government needs to increase capital expenditure to vitalize the country's economy and create employment. Reducing recurrent expenditure and increasing the capacity to spend the development budget should be the government's primary task.

'Only if at least 40 percent of the allocated budget is spent as capital expenditure will the economy become dynamic, but the actual spending is currently struggling to reach even 10 percent,' says Singh. 'The new government must take these problems seriously and create a construction-friendly environment.'

What Does the Department Head Say About Road Problems?

The Director General of the Department of Roads, Dr. Bijay Jaisi, has stated that the main challenges in the construction of the country's roads, bridges, and other infrastructure are a shortage of budget and raw materials.

In a conversation with Ratopati, Dr. Jaisi mentioned that projects are affected by the weak state of budget allocation and the difficulty in easily obtaining construction materials like stones and gravel. 'We are continuing to work, but the problems of budget and raw materials are causing difficulties,' he says. 'We faced significant problems due to the unavailability of gravel while constructing the Naubise-Mugling road section.'

He complained that projects are not being completed on time due to problems such as the government not allocating sufficient budget to projects and legal complexities preventing the easy use of locally available construction materials. Furthermore, delays in tree felling and relocating electricity poles during road construction have also slowed down projects.

The impact of the international situation is also beginning to affect Nepal's construction sector. 'Due to the West Asia war, the price of construction materials has increased, and gradually, it is becoming difficult to procure materials,' says Dr. Jaisi.

Nepal's Road Infrastructure: Status from the Rana Era to Federalism

The development of Nepal's road infrastructure has traversed a historical and challenging journey from the Rana regime to the current federal structure. The history of modern road construction, which began in Kathmandu in the 1980s of the Bikram Sambat era, includes the interesting anecdote of a car being brought in by porters in VS 1998.

The first road outside the valley was the 42-kilometer Amlekhgunj-Bhimfedi, and in VS 2009, the Tribhuvan Highway, built with Indian assistance, connected Kathmandu to the Terai for the first time. In terms of institutional development, before the establishment of the Department of Roads in VS 2017, bodies like 'Bato Kaja Goshowara' and 'Chhambhadel Adda' handled infrastructure work.

The East-West Highway was inaugurated in VS 2019, and in VS 2023, Nepal was connected by road network to its northern neighbor, China. Uniformity in road construction was achieved after the issuance of the 'Nepal Road Standard' in VS 2027. After the restoration of democracy in VS 2046, road expansion gained further momentum, and the strategic road network exceeded 10,000 kilometers. With the country entering federalism, the management of national highways has come under the jurisdiction of the federal government as per Schedule 5 of the Constitution.

Currently, the Department of Roads oversees and constructs 80 national highways (14,913 kilometers) across the country. Road access has reached all 77 districts of Nepal, and the headquarters of 76 districts are connected to the national road network (Humla is connected via the border crossing with China). Paved roads have reached the headquarters of 72 districts among them. About 7,000 kilometers of the total national highways have been paved, and more than three and a half thousand motorable bridges have been constructed.

Nepal has now entered a modern era of road infrastructure. With the construction of the Nagdhunga Tunnel, the country has entered the tunnel era, and the Siddhababa Tunnel is also under construction. Strategic projects like the national pride project Kathmandu-Terai/Madhes Fast Track, East-West, Postal, and Mid-Hill Highways are connecting remote areas. These achievements provide a foundation for prosperity for the new government. However, challenges related to construction quality, sustainability, and timely completion of projects still remain.